LETTER | “Nest egg” has been used to refer to savings since the 17th century, derived from poultry farmers' tactic of placing eggs - both real and fake - in hens' nests to induce them to lay more eggs.

Let us compare the nest egg of public service officers against Employees Provident Fund (EPF) contributors.

Often, we hear most Malaysians don’t have enough in their nest egg to retire. Among the factors are bad policies, low wages and the phenomenon of a fast-ageing society.

An article by Lee Kum Chee (Faculty of Economics, Universiti Malaya) in the Jurnal Ekonomi Malaysia 31 (1997), titled “The Malaysian Government Pension Scheme: Whither Its Future Direction?”, stressed that the basic principle that should be adhered to is - social security should not be deemed a function of the government alone. Individuals should be encouraged to participate through private saving and asset ownership.

The role of the government could then be gradually but significantly reduced. The longer a pension scheme is implemented, the greater the number of benefits provided and very difficult to be withdrawn. Retirees may be disillusioned when the pension scheme is unable to deliver.

Now, the numbers.

Public service officers get the following benefits:

• Service pension (monthly - 1/600 x number of months of service x corresponding last salary subject to a maximum pension of three-fifth (3/5) of the last salary (after a service of 30 years or 360 months)
• Service gratuity (lump sum - 7.5 percent x number of months of service x corresponding last salary.)
• Cash award in lieu of leave (lump sum)

Strain on govt 

Expenditures on pensions and gratuities were RM87 million in 1971 and RM2,755 million in 1995. In Budget 2022, it is a whopping RM28,000 million. Add the emoluments for the civil service, the total is RM114,500 million or about half of the operating expenditure (OE) allocation.

In 2017, the Youth and Sports Ministry publicly warned that Malaysia’s pension system could be strained by 2050. The former Finance Ministry secretary-general suggested that the government downsize the public service rather than be forced to do it, like what happened in Greece.

The steepest annual increase in emoluments was in 2008.

During this pandemic, EPF withdrawals totalled RM101 billion disbursed to close to half of all members. This led to 6.1 million members having less than RM10,000 in their accounts. And it is unrealistic to assume topping up by working an additional four to six years after retirement.

Bumiputera members, made up 78 percent of the withdrawals and 54 percent of bumiputera members have less than RM10,000 and 2 million or 25 percent have less than RM1,000. As it is, 73 percent (or over 11 million) EPF contributors will not have adequate funds to retire above the poverty line.

The available egg has cracked, so how to induce them to lay more eggs?

Draining EPF 

I am appalled when politicians keep pressing to review the withdrawal and to allow contributors to withdraw more from their EPF account one in order to alleviate contributors burden. 

I would have expected the politicians to be pressing on corruption and the lack of accountability in government spending. Just look at the annual Auditor-General Report and the amount of loss of the country’s riches - RM620 million in losses by ministries in 2020 alone.

Many contributors are now jobless - the attendant derision or pity is often used as a cautionary tale. I felt deep pity for them since 2.3 million public service officers and pensioners will receive one-off special financial assistance (higher than 2021) in Budget 2022. This is in addition to some more benefits to which it is difficult to attach price tags.

It is a token of appreciation for their contributions to public service delivery and the assistance will hopefully motivate the public service officers to continue serving the nation with full dedication.

With both real and fake eggs securely placed in the nest, we trust it will induce public service officers to lay more eggs and contribute effectively and help to save government spending so that other Malaysians can share the rewards.

Public service officers should also be politically impartial and independent of the government.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.