Thursday, November 6, 2008

EPF Contribution 3% Reduction : Is It Wise?

Read in the news today, EPF will "enforce" automatic 3% reduction over employee contribution. From my point of view, I don't see this would be any wiser, besides it's contradict to what Najib had mentioned earlier - the reduction will be on employee's decision, not to be automatic.

Living in Malaysia and learnt much about their habit, the purpose of contributing to EPF will a little bit off path. Many researches show that more than half of Malaysian population does not have enough saving for their retirement. Contributing factor would be due to less of saving.

By giving the "extra money" which was forked out from the pocket and put on the hand of the very person - I don't see any interesting part here. It is not "new" money received anywhere else, but from ones pocket itself. And having the extra money, will not help much in the environment that customer's buying power is pretty low.

The sudden of nearly half increasement of fuel prices, then followed by stages of small price reduction is pretty much unfair. While the world oil prices has put break and goes below the line, government should be proactive to reduce and meet the rate of market.

Looking back at the automatic reduction once again, mind you the 3% automatic reduction will be NOT be tax-exempted. How creative our government!

1 comment:

Unknown said...

EPF 8% Means Paying More Income Tax (For High Income Group)

Assume monthly basic salary is RM4000.
- If your monthly EPF contribution is 11% ( RM440 ), taxable income = RM3560, income tax payable = RM77.
- If your monthly EPF contribution is 8% ( RM320 ), taxable income = RM3680, income tax payable = RM109.
Conclusion : If you choose to contribute 8%, you will end up paying more income tax,
this measure is meant to boost up the slow-down market,
but from this example we see that the money does not go into the market.
Instead the money goes direct into the govt
through the greater amount of income tax that we will have to pay.
Obviously this measure does not help the market at all.