MTUC: Socso, EPF have different responsibilities
KUALA LUMPUR: The merger of the Social Security Organisation (Socso) and Employees Provident Fund (EPF) will likely cause problems in generating long-term returns.
Malaysian Trade Unions Congress president Datuk Abdul Halim Mansor said the two agencies had the same “parent” — the International Labour Organisation Convention of 1952 regarding social security (minimum standards) — but with different responsibilities.
He said EPF was given the mandate to coordinate a retirement fund whereas Socso managed social security and worker affairs.
“There are several differences in jurisdiction and job scope as the Social Security Act 1969 was placed under the Human Resources Ministry while the EPF Act 1991 is under the Finance Ministry.
“It would be better if all the quarters involved, the human resources and finance ministries, EPF and Socso sit down and discuss things before any proposal is put forward.
“Any proposal must be accompanied by technical evaluations on the mechanism involved a merger of the two bodies... so that such a move does not invite any sort of speculation or annoyance, especially among contributors,” he said.
Human Resources Minister M. Kulasegaran was recently reported as intending to propose the merger of EPF and Socso, which had funds of RM26 billion and RM800 billion, respectively, as of last year.
He had been reported as saying that the two bodies more or less served the same purpose and therefore should be merged.
However, Halim said Socso and EPF played two different roles and utilised different mechanisms for contributions.
He said Socso had a ceiling salary of RM4,000, which saw workers contribute 0.5 per cent of their salaries while employers contribute 1.75 per cent of their workers’ salaries.
Halim said it was aimed to protect workers in terms of social security.
“Socso does not guarantee returns in the form of dividends. EPF, meanwhile, does not set any ceiling for contributions, but requires a minimum contribution of 11 and 13 per cent for employees and employers, respectively. EPF also guarantees returns in the form of dividends,” he added.