Earning 3.17 times but no EPF contributions means losing out on huge returns yeah

Earning 3.17 times but no EPF contributions means losing out on huge returns yeah

Reduced savings for Malaysians earning SGD today versus previously

In 23 Feb 2024, the exchange rate for SGD1 is equal to RM3.55 and since then, ringgit has slowly strengthened. Take a look at the image below. The latest exchange is SGD1 to RM3.17 and this meant that Malaysians earning SGD every month has seen their earnings when converted back to ringgit reduced tremendously.

For example, if one was earning SGD4,000 per month in February 2024 and this person was able to save half of the salary back into RM, it would have been SGD2,000 x RM3.55 and that would be RM7,100 savings every month. Today, the same savings in SGD would amount to RM6,340. This is a reduction of RM760 per month which is equal to 100 bowls of Prawn Noodle every month. In one year, the amount ‘lost’ is RM9,120. An amount sufficient to pay over 20 percent of downpayment for a new Proton Saga 1.5 litre.

What else could Malaysians earning SGD do? Well, they could also save into the EPF to get the dividends from EPF too. Below are EPF’s advice.

Article in thestar.com.my Malaysians with Singapore work permits are being encouraged to voluntarily contribute to the Employees Provident Fund to increase their retirement savings.

EPF (southern) regional director Nor Azhar Abdul Mokti said these workers were not required to contribute to Singapore’s Central Provident Fund (CPF).

He added the number was too large to ignore with about 300,000 to 400,000 commuting daily to the republic.

Currently, it is mandatory for Singaporeans and permanent residents to contribute to CPF, but not foreign workers on a work permit.

Due to this, Malaysians earn a gross salary with no deductions. Article in thestar.com.my

Savings today, doubled 13 years later

If we use the Rule of 72, we could quickly come to the conclusion that whatever we saved this year could double 13 years later if the dividend rate is maintained at 5.5 percent per year from our EPF. Since Malaysians earning SGD are still earning at a rate of 3.17 times higher every month, this is a very good base to save and double whatever amount in the future. Honestly speaking, if we do not save every month, we will spend the extra money every month. If however we intend to save the money anyway, then our EPF is an extremely good option in terms of returns.

Happy noting this and hopefully many would make a good decision too. Our future depends on what we do today.

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