Although in the Asian country it was possible to partially withdraw money for pensions to pay for education, health and housing expenses, as well as confinements due to Covid-19, the established limits were extended. But authorities now fear that four out of five Malaysians will live below the poverty line a few years after retirement.
The story may sound familiar and may even resemble what happened to a neighbor or acquaintance. A small businessman, with a lure fishing business that produces enough income to live on, sees the need to tap into his retirement savings to ride out the economic crisis derived from the massive and prolonged lockdowns at the worst time of the coronavirus pandemic. coronavirus. .
And although withdrawals were used in Chile as a strategy to make up for the lack of income, this story did not happen in the country, but about 16,000 kilometers away, in Malaysia. Now authorities in the Asian country are warning that 81% of contributors in Malaysia will not have enough savings to live above the poverty line after retirement.
Contrary to the local case, before the pandemic Malaysia allowed the partial withdrawal of old-age savings, as long as they were used to cover expenses such as education, health or housing. However, during the administration of then-Prime Minister Muhyiddin Yassin in 2020, the government allowed the funds to be used to try to ease the economic hardship caused by the lockdowns in the country.
This was the case of Roob Ganesan, owner of a factory dedicated to the production of fishing lures and bait who saw his money flows seriously damaged by sanitary measures, portrayed the Qatari channel Al Jazeera. He had no intention of laying off his 22 employees, but as the world entered its second year of the pandemic and the government passed into the hands of Ismail Sabri Yaakob, he began to lose hope of returning to his pre-pandemic financial levels, considering who could not open to the public.
“My business suffered losses due to decisions taken by the previous administration and I thought things would change,” Roob Ganesan, owner of Dave Fishing Sdn Bhd, told the same outlet.
He didn’t want to lay off his employees, but he also didn’t have enough cash to keep the business afloat, so he decided to withdraw 15,000 Malaysian ringgits (approximately US$3,400) from his personal Welfare Fund account. employee pension fund (EPF). , equivalent to just over 7.5% of their total savings.
Retired in two installments, Al Jazeera continued, the money allowed the entrepreneur to run the business and pay its employees. “There came a time when I had very little cash, so the EPF withdrawals were a blessing,” he said. “I don’t regret it at all, because it was the right thing to do.”
But alarms were raised among the authorities when they noticed the hole generated in the funds of a significant part of the population. Official figures show that some 145 billion ringgit, or nearly US$33 billion, was withdrawn from PEF accounts during the pandemic.
The pension problem is not new in Malaysia. A report carried out by the BBC in November 2014 had already warned of the concerns of the Central Bank of this country because of the impossibility for citizens to save for old age. A report by the national body found that seven out of 10 Malaysians who contributed to the scheme had less than RM15,000 in their personal savings, which could only last for a few years after retirement.
And the situation is not much different today. According to Al Jazeera, although the withdrawals have worked as a lifeline for many employers and workers, low wages, high levels of debt presented by citizens and increased life expectancy have led authorities predict that 81% of people will live below the poverty line after retirement.
The central bank itself sounded the alarm again last month, warning that the average Malaysian risks running out of pension money for up to 19 years before dying. Last December, 51% of the 6.7 million contributors under the age of 55 had less than 10,000 ringgit ($2,250), Al Jazeera reported.
“Based on the life expectancy of Malaysians, RM10,000 only allows affiliates to earn retirement income of less than RM42 ($9.5) per month for a period of 20 years,” a doorman said. – speech of the government.
Nungsari A Radhi, an economist and former MP, told the same outlet that the decision to broaden the reasons for withdrawing the funds was a mistake. “After the withdrawal of RM145 billion from the pension fund, what is on the horizon are retirees who will live in poverty if they only have their PEF, and that does not include the large number of people without pension funds,” he explained.
Source: Latercera
I am Robert Harris and I specialize in news media. My experience has been focused on sports journalism, particularly within the Rugby sector. I have written for various news websites in the past and currently work as an author for Athletistic, covering all things related to Rugby news.
