Proposal is myopic

I AM responding to the call made by Malaysian Institute of Taxation president Dr Veerinderjeet Singh to cut EPF deduction to put more money in employees’ pocket (The Star, Aug 20.) While Dr Veerinderjeet may have his reasons for making the suggestion, as a contributor I would like to caution the authorities that such a move would be myopic and not at all in the interest of EPF contributors’ longer term retirement needs. Under the EPF scheme, both the employee and employer contribute to a total of 23% of the employee's monthly wage. This contribution is accumulated in an individual account, which earns dividend annually. The savings is not absolutely hedged against the impact of inflation. If it happens that the inflation rate is higher than the dividend declared on savings in a particular year, the real rate of returns will... [read full story]