FMM In The News: THE EDGE MARKETS, KUALA LUMPUR, May 2, 2023 - The Federation of Malaysian Manufacturers (FMM) said it is not in favour of the call to increase the employers’ Employers Provident Fund (EPF) contribution as a means to boosting employees’ retirement savings, especially during this current challenging economic period.
It said the government’s focus now should be on short-term and immediate initiatives for workers to have more money in their pockets and to improve the purchasing power of the rakyat amid the continued price pressures that impact everyone.
“The government’s focus should be on keeping the cost and standard of living of the rakyat manageable, as well as ensuring a positive economic growth trajectory which would provide a conducive environment for businesses to increase their profits and improve their cashflow,” FMM president Tan Sri Soh Thian Lai said in a statement on Tuesday (May 2).
On Monday, Prime Minister Datuk Seri Anwar Ibrahim told the media after launching the Labour Day celebration in Putrajaya that calls by workers for employers to contribute 20% towards the EPF would be discussed.
Employers are currently required to contribute 13% for those earning RM5,000 and below, and 12% for those earning above RM5,000.
Soh said the monetary value of the employer’s contribution does not remain stagnant but increases yearly based on wage adjustments, in tandem with changes to the Consumer Price Index.
“While the statutory contribution rates for employers are fixed, employers have the discretion to contribute a higher percentage based on their respective human resource and talent retention strategies, wherein their contribution is tax-deductible up to 19% of the employee’s pay,” he added.
Hence, he said mandating all employers a higher contribution rate would be detrimental, especially for the SMEs (small- and medium-sized enterprises) that make up 97% of businesses.
Soh also said that with EPF’s strong governance structure and continued good investment practices that have produced enhanced returns, the fund will continue to further strengthen and enrich the retirement savings of its members.