Diminshing Nest Egg

Posted by M ws On Wednesday, August 22, 2012 0 comments
I just read this post by Kong See Hoh of The Sun which really resonates with me. Being an eccentric person who abhores materialism, I opted to leave full-time employment in 1995 when my older boy started his primary education. Since then, EPF contributions have been minimal so I have just a tiny quail's egg in my EPF. Whereas in the past I was not that particular with regards to expenses since I only spend on gadgets and IT stuff while shopping rarely and carefully, at my age now, I do worry about my future. I do not expect my children to support me but if they do, it is a blessing. Being emancipated, I do not get allowances from my husband since the day I said 'I do' and pay my own credit card bills. Sometimes, he does clear some of my unexpected bills such as my first experience in online shopping to support a friend's daughter's site. Still, at the rate the cost of living is spiralling and looking at my diminishing nest egg, I do feel quite worried. Whilst I have yet to enter the doldrums, I can feel the heartbeat steadily increasing in tandem with anxiety level. If you are still young, do think twice about buying that consumer good and ask yourself if it is necessary. If not for my fetishes with handbags and shoes when I was younger and my craze for IT gadgets and handphones, I believe I could have much more $$$ than I do right now. So, save while you are still young and spend wisely!

EPF savings of many retirees inadequate by Kong See Hoh, The Sun

MANY retirees find themselves in the doldrums because they do not have enough EPF savings to last them through their golden years.

According to a report in Sin Chew Daily today, a total of 62,358 contributors who turn 55 this year have only about RM150,000 each with EPF.

Based on the average life expectancy of 75 years for the average Malaysian, it means that many of these retirees will only have RM625 a month at their disposal for the last 20 years of their lives.

The EPF’s 2011 statistics showed that contributors who had reached 54 and were still actively contributing to the fund numbered 62,358, and their average savings were RM150,000 each.

According to Malaysian Employers Federation’s (MEF) estimates, each retiree needs RM700 a month to cover his basic expenditures.

However, EPF public relations general manager Nik Affendi Jaafar told the daily that whether retirees have enough EPF savings depends on the contributors’ needs, lifestyle and home location.

It is very difficult to accurately calculate how much one needs per month as living expenditures, he said.

If a retiree still has school-going children, the monthly expenditure will be very much higher.

It is hard to imagine that EPF savings of RM150,000 alone are enough as contribution to meet his or her expenses for 20 years after retirement.

Nik Affendi agreed that some contributors will encounter financial problems after they have retired.

As such, he urged them to make early plans for retirement as sound financial planning would ensure they have saved enough for retirement.

He pointed out that as at 2011, EPF had 13 million contributors but only about half of them, or 6,262,832 were active members.

“Figures as at end-2011 showed that only 7.37% (461,479) of the active contributors had savings of more than RM150,000 each, whereas active contributors with between RM50,000 and RM150,000 in savings accounted for 21.74% (1,361,325), and those with less than RM50,000 in their savings made up the bulk at 70.89% or 4,440,028 persons.”

Meanwhile, Nik Affendi disclosed that 75% of the contributors have yet to name their beneficiaries despite EPF’s repeated reminders to them to do so.

He said should a contributor pass away without naming any beneficiary, his or her family will have to go through a tedious and lengthy process to claim his or her savings.

He urged those who have yet to list their beneficiaries to do so as soon as possible.

Nik Affendi pointed out the EPF has, through many channels including advertisements in the media, counter services, its hotlines, Facebook as well as Twitter accounts, made efforts to raise contributors’ awareness on the importance of naming their beneficiaries.

He said the fund had also set up mobile service counters at areas with high human traffic to make it convenient for contributors to name their beneficiaries.

Nik Affendi said self-employed peoples such as artistes, taxi drivers, petty traders, hawkers, farmers, fishermen and home-makers can also plan for their retirement with the EPF.

“They can choose to make contributions to the fund, or take part in the 1Malaysia Retirement Savings Scheme, which was launched in January this year,” he said.

He disclosed that as at June, the scheme, which requires a participant to deposit a minimum of RM50 a month, had attracted some 55,000 participants who had deposited a total of RM151.86 million.

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