EPF urges informal sector workers to contribute to 1Malaysia Retirement Scheme
KUALA LUMPUR: The Employees Provident Fund (EPF) is calling for more people working in the informal sector to contribute to the 1Malaysia Retirement Savings Scheme to ensure a secure financial future.
Deputy Chief Executive Officer of Strategy Division, Tunku Alizakri Raja Muhammad Alias said employees in the informal sector, defined as the part of the economy that is neither taxed nor monitored by the government, did not have a proper protection system for their retirement compared to the formal or government sectors.
The sector includes those involved in “gig economy” – a group of people with temporary or flexible jobs such as online jobs or businesses, Grab or Uber drivers, independent contractors and freelancers.
“We need to ensure that the people understand the impact of retirement and how to prepare for it as early as possible.
“Financial legacy is a key factor, and 70 per cent of Malaysians are below the global level of acceptable financial literacy rate,” he told reporters at the EPF International Social Security Conference 2017 here yesterday.
Tunku Alizakri said the people should have the necessary financial knowledge which would empower them to take charge of their investments.
“The EPF is only part of their investment for their retirement, we need to make sure that those in the gig economy would invest not only in the EPF but also in the private retirement scheme and in insurances, among other things,” he added.
He said about 10 per cent out of the total workforce in Malaysia were government employees and thus eligible for the pensions scheme, and approximately 40 per cent were in the formal sector, which is provided for by the EPF, while 50 per cent of the workforce fell under the informal sector category.
Although those in the gig economy sector makes a lot of money, Tunku Alizakri said most of them were ill-prepared for their future.
“Everyone should prepare for their retirement as early as possible. We know for a fact that the majority of our members don’t have enough savings because they don’t plan far ahead and don’t really understand the needs for their future,” he said.
Meanwhile, EPF Chairman Tan Sri Samsudin Osman said the gig economy was a fast growing industry, accounting for between 20 and 30 per cent of the global workforce, mostly comprising youngsters who preferred flexible jobs and pursuing freelance opportunities.
However, as the gig economy expands at a faster pace than the traditional job market, he said individuals in the gig economy were often inadvertently left out of the social security coverage.
Themed ‘Future of Work: Preparing for Tomorrow, Today’, the two-day conference which started today is jointly organised by the EPF and global investments company, The Bank of New York Mellon. — Bernama