HOPEFULLY, the dust would have settled and the confusion cleared up with Prime Minister Datuk Seri Najib Razak’s announcement that the age for full withdrawal of Employees Provident Fund (EPF) savings by contributors remains at 55.

For those who retire at 60 — now the official retirement age for working Malaysians — any additional contributions from the age of 56 will be placed in a separate account, with the savings only allowed to be withdrawn at 60.

But many questions remain. Can someone opt not to withdraw at 55 but still be allowed to make a full withdrawal if he becomes unemployed later, or decide to retire before 60? Does the prime minister’s announcement mean that the EPF will no longer pursue the option of aligning the full withdrawal age with the new retirement age of 60? Will it now abandon its proposal of shifting, every three years, the full withdrawal age by one year so that the target of full withdrawal by 60 can be achieved in 2031?

Anyway, apart from whatever proposals the EPF may present in the future, the move to maintain the full withdrawal age at 55 has proved overwhelmingly popular.

In my WhatsApp group of college mates — even though they are not affected by the recent EPF proposal as those aged 52 and above can still make full withdrawal at 55 — the mood was uncompromising.

After working for about 33 years, they feel 55 is the right age to enjoy the fruits of their labour. At 55, rightly or wrongly, they do not want to be told what to do with their money. It is their right, they feel, to use their savings any way they wish to even though some might end up spending it all in less three years.

Taking away that right at 55 is a definite no-no, no matter what they plan to do with their savings, whether it is to pay debts, go for a holiday, perform the haj or finance their children’s education. Others may opt to invest in the volatile stock market, put the money in the better-performing unit trusts, buy a car or invest in real estate.

While they appreciate the EPF’s concerns that they might not have enough money to sustain them into their 60s or 70s, they believe the board should not need to remind them of the importance of savings and how to manage their finances prudently.

For many of my friends, they just want the EPF to stick to what it is good at: managing contributors’ savings, avoiding bad investments, giving reasonable returns and never to be used by the government as a bail-out vehicle. In short, take care of “our money” and let us manage or spend it the way we want to.

But the EPF’s concerns — as a provident fund — are real enough. To the EPF, it is not just about managing the fund and giving reasonable returns to contributors. It feels it has the responsibility to ensure contributors have enough savings to see them through their years of retirement. So, if the retirement age is now 60, full and final withdrawal should only be made then.

The statistics on savings among employees is indeed a course of concern for the nation. Khazanah Research Institute, in its November 2014 report titled The State of Households, revealed worrying statistics on income disparity, distribution, debts and savings, among other things. While the report says Malaysia has many wealthy people, the level of savings, including EPF contributions, among the majority is appallingly low.

Findings in the UNDP’s Malaysia Human Development Report 2014 too show that many Malaysian households have limited savings. The low level of precautionary savings means that most families would be in trouble if faced with unforeseen circumstances such as a sudden reduction in income, unemployment or other emergencies, the report adds.

The Khazanah report cited the low savings rate by bumiputeras in the Amanah Saham Bumiputera (ASB) scheme as an example. ASB, which offered attractive annual returns of at least 8% for many years, should attract more savings but the bottom 71.4% of its unit holders in 2013 just had an average of RM554 in their accounts. At the end of 2014, ASB had 8.6 million investors.

The report also said a low savings rate is not confined to bumiputeras. EPF data shows that savings are unequal regardless of ethnic group. The savings of the top 17,061 members are greater than the total savings of the entire bottom 44%, comprising 2.85 million members.

Active EPF members in the 51 to 55 age group — the majority of whom want full withdrawal at 55 and not 60 — only have an average of RM147,057 in their accounts. If the richest 5,446 members (with average savings of RM1.56 million each) are excluded, the average savings of the remaining EPF members in this group would only be RM127,460. That’s hardly enough to see them through the next 20 years of their lives.

The low level of savings and the fact that what many have in their EPF accounts won’t last long after they reach 60 could pose an economic burden to the government. The number of those in their late 50s and 60s looking for work will increase, putting pressure on the job market. Already, the government is facing a challenging time creating jobs for graduates and school-leavers.

The low level of savings is basically the result of low incomes. This needs to be corrected, and the government has put in place many plans to boost average income levels, including implementing a minimum wage policy.

But the other side of the coin is that we need to inculcate good savings habits among employees and notably the young. It is likely that a spender in his 30s or 40s will remain one when he reaches 55, and this is something that many, including the EPF, can’t do anything about.

Azam Aris is senior managing editor at The Edge

This article first appeared in Forum, The Edge Malaysia Weekly, on April 27 - May 3, 2015.

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