Yesterday, at the opening of the Universiti Islam Antarabangsa Malaysia in Gombak, Kuala Lumpur, Mahathir told reporters that EPF contributors “are now free to decide on the amount of their monthly contributions based on the percentage of between nine and 12% of their salary”. (The Star)
Mahathir said that the “flexibility” given to employees in their monthly contribution to the Employees Provident Fund (EPF) has taken into account the complaints of contributors who do not agree to their contribution being reduced from 11 per cent to nine per cent.
The impression given is that the government is very sensitive to the widespread unhappiness at the reduction of the employees’ EPF contribution by two per cent and it has decided to make the cut optional rather than compulsory.
In actual fact, as I had pointed out last month immediately after Mahathir had declared that the two per cent employees’ EPF contribution cut was compulsory, such a measure was against the law as the EPF Act 1991 makes it very clear that such a two per cent cut can only be optional and cannot be made compulsory.
The fiasco of the EPF two per cent cut in employees’ contribution is an embarrassment to both the government and the EPF and it highlighted their ignorance of the provisions of the EPF Act 1991, which does not reflect very highly on their competence or standards of governance.
Mahathir should explain why it has taken the government and the EPF three long weeks to advise him that the two per cent cut in employees’ EPF contribution announced by him in the RM3 billion economic stimulus package can only be optional and not compulsory under the law!
In fact there should be a high-powered departmental inquiry into the fiasco of the 2% cut in EPF contribution as to why the government and EPF had been so negligent in exposing the Prime Minister to public ridicule for three weeks for not knowing that the cut could only be optional and not compulsory under the law.
During this period, attempts by Mahathir to appear very reasonable as when he said that the government was prepared to review the two per cent EPF cut if the people are against only made him look very foolish and compounded public alarm at the shocking decline of standards of governance in the country when the Prime Minister could be so ignorant of the law and there was no one to correct or rectify him in the 800,000-strong civil service for three long weeks!
The fiasco of the EPF two per cent cut in employees’ contribution has reinforced public concerns at the competence, professionalism and integrity of EPF management and investment of the RM181 billion EPF funds belonging to the 9.7 million EPF members as their old-age savings and raised anew the urgent question for a new EPF policy on accountability and transparency.
The Sun today reported that since the March 27 announcement reducing the employees’ contribution by 2 per cent for a year, thousands have submitted option forms to top up their contribution to 11%.
It reported that the EPF headquarters has received some 30,000 forms and its offices elsewhere have run out of forms, and that up to now, the EPF was just leaving the forms unattended as it was not prepared for the “deluge”.
The EPF is not giving the public a very impressive image of competence, efficiency and professionalism as it had not been able to honour its public pledge to approve all applications by EPF members within two weeks.
Last month, the EPF Chairman Tan Sri Abdul Halim Ali said that EPF staff were working overtime to clear the staggering backlog of unprecedented number of applications from EPF contributors under various EPF schemes so that EPF members will not have to wait for months before their applications are approved.
Among the schemes offered by the EPF are withdrawals for health reasons, children’s higher education, the purchase of a second home and computers. Civil servants who had contributed to the EPF but have decided to opt for the pension scheme can also withdraw their savings.
The EPF had previously said that it would try to approve all applications, except for the pensionable civil servants, within to weeks.
But before the EPF could clear the mountain of blacklog of various applications by EPF contributors, the EPF is being inundated by another deluge of applications by EPF members who want to exercise the option to continue to make 11% contribution to the EPF.
Would the entire EPF grind to a halt if say 50 per cent of the 9.7 million EPF contributors opt to continue to make 11% contribution, with an avalanche of some five million applications jamming all EPF operations in the country?
In my media statement of 2nd April 2001, I had suggested a solution to the problem. I had proposed that the MTUC President, Senator Zainal Rampak and the other four workers’ representatives on the EPF Board requisition an emergency Board meeting to ensure that employees who want to continue to contribute 11% to EPF can do so without any hassle or additional red tape whatsoever.
The most convenient and hassle-free method for the 9.7 million EPF contributors who want to continue to pay 11% rate of contribution instead of nine per cent is for the EPF to recognise any continuation of the previous EPF contributions without the two per cent reduction as adequate notice of such option.
This would mean that there would be no need for any EPF contributor to go through the hassle and red tape of having to send a separate notification to the EPF to forgo the two per cent cut and to keep to the 11% contribution rate - which could run into millions of notices inundating the EPF and grinding it to a halt.
Has Zainal and the other four workers’ representatives on the EPF Board jointly requisitioned for such an emergency EPF Board meeting, or are the workers’ representatives of the EPF Board not allowed to requisition for such an emergency meeting?