KUALA LUMPUR, March 8 — The Employees Provident Fund should let contributors choose the lower contribution rate introduced in the 2020 Economic Stimulus Package rather than implementing this automatically, said the Malaysian Trades Union Congress.
The initiative is currently opt-out and contributors must complete a form to avoid reducing their contributions from 11 per cent to 7 per cent for 2020.
“While MTUC does not begrudge the government for allowing workers to reduce their monthly contributions to the retirement fund to deal with the economic downturn, the EPF must not be seen as encouraging workers to take up the option unwittingly,” the MTUC said in a statement.
It also argued that workers would typically choose the lower contribution rate to have more cash now but without realising the ramifications to their retirement savings.
The MTUC also pointed out that not all workers would get equivalent of the 4 per cent difference in their salaries as those liable for income tax would see this subject to taxation.