By Medecci Lineil
I refer to your news article “Public consultation reveals EPF members want status quo on withdrawal” dated May 6, 2015.
Without conducting the so called the largest public survey I already knew the result that EPF contributors want their full withdrawal to stay at age 55.
The reason; the hard earned money is ours and we deserve to withdraw and spend them as we prefer.
There is nothing wrong about that.
So what is really going on? It is not about the amount of saving whether sufficient or not.
It is about the declining purchasing power of our money as a result of inflation.
That is the fact we need to look into.
The big question of economics we need to understand is what is the real cause of inflation, why do we have inflation, why do prices go up every way they seem to, what is money, who is control money supply, what interest rates is, and who control interest rates.
Under low interest rates and high inflation environment we hardly saving money.
Have we noticed that we are now paying more for less? The prices are rising while our purchasing power is declining despite government assurances stating that inflation is under control.
The reality is things like nasi lemak, mee kolok, school uniforms, medication and other necessary items have become more expensive thus impact the disposable income of individuals.
Mee kolok for example, its serving size is getting smaller either at the same price or higher price. And the size of chicken rice also is getting smaller. Just a small plate costs us more than RM4.50.
A monthly grocery shopping with my wife to restock our household supplies at Emart Batu Kawah, we find items such as food, ketchup, toilet paper, biscuits, noodles, vegetables, house cleaning, milk powder, diapers and the like can easily cost us more than RM400.
Not only that a family relative of mine who is working as civil servant is heavily depending on debts to finance his consumption; television, wedding loan, house loan and car loan. Even an automatic salary deduction to pay back his debts, it does not mean his burden of debt is lighter.
Khazanah Research Institute’s State of Households Report issued last November pointed out that lower income households are disproportionately affected by rising food and utility prices because a large portion of their income is spent on food, housing and utilities.
The report said “The vast majority, the bottom 74% (4.36 million) of household who earn less than RM6,000 a month, live in a world where food prices really matter and savings are measured in thousands of ringgit”
We must address the fundamental questions above first before we solve the problem of savings. What we really want is the demand for money’s purchasing power. After all, we don’t want a greater amount of money like BR1M, extending the withdrawal age from age 55 to age 60 and higher minimum wage in our bank account so much as we want greater purchasing power in possession. Greater purchasing power will leave us greater opportunity to save.
First published at The Malaysian Insider on May 15, 2015.