EPF

I think the Employees' Provident Fund (EPF) has been doing an excellent job in firstly safekeeping our retirement fund and secondly in providing probably one of the best rates of return on investments for those funds.

What the banks give as interest rates on savings are at best half of the EPF rates of return. For those retirees who are going to just rely on their retirement funds as sustenance in their twilight years, the best thing to do is to leave their money with the EPF for as long as they can (currently, 75 years of age) or until the deposit rates in financial institutions in Malaysia rise to decent rates.

Of course, there are people who have their dreams to pursue on retirement (currently 60 years of age). There is this "big" sum of money that they are going to get their hands on to "solve" all the money problems they have been having all their lives. Or, for once in their lives, they do not want to be bossed about anymore and they are going to be their own bosses. They are going to invest their own funds and set up their own businesses ("fried kway teow" stalls used to be a very common idea). Some may simply want to "take their money out" and live abroad and be done with their wonderful country which has been feeding their grandparents, parents, themselves, children and grandchildren. Everybody has dreams that the "grass on the other side is greener."

This is not the current issue. Everybody can do what they like about their own money, their "hard earned" money, money they have "slogged all their lives." The issue is whether the age for full lump sum withdrawal should be increased from 55 to 60 years of age, as this official retirement age has now been extended from the government sector to the private sector in 2013.

It is logical for EPF to consider whether this issue of raising the age of full withdrawal from 55 to 60 years of age. It is an administrative issue which needs to be addressed, whether EPF likes the idea or not.

The most logical answer is that, in line with the increase in the official retirement age for all employees in Malaysia to 60 years, according the age for the full withdrawal of EPF funds should also be on retirement on reaching 60 years of age.

But there is such a thing as "early retirement" or "optional retirement" and it is only natural that these options should be built into the scheme for full withdrawal. Nobody wants to be caught in a situation when one opts for early retirement but have no access to one's entire EPF funds.

The argument that usually the entire EPF funds upon withdrawal will be gone within three years or so. (I know of a case where the cash didn't last three months because of excitement over an investment dream.)

But this is not for EPF to impose its value judgment on the retiree. It is for the retiree to take full responsibility for his or her money.

The only thing that EPF can do in this regard over the quick disappearance of fully withdrawal EPF funds is to offer more attractive schemes for the retirees to keep their money in the EPF. If EPF is interested in doing a customer outreach or a PR exercise, it may want to put some effort in building the confidence that EPF is the best place to keep your hard earned savings, as it is safe and the returns are the best. EPF can think think more like an insurance company.

I think various schemes have been rolled out in the past and they are good. But this may be the time to overhaul the entire EPF framework to take of retirees who do not seem to be in a hurry to go. I think this is an opportunity for EPF to put its best foot forward and do real public good. There may be hope for Malaysia in EPF.