EPF News: Retirement savings up to RM512,500 with Progressive Wage Policy

EPF News: Retirement savings up to RM512,500 with Progressive Wage Policy

Salary increments are good, everyone loves it

Let’s be honest. Every working Malaysians would want to have higher salary every year; salary increments. Even if I am an entrepreneur, I also want to have a higher pay for myself every year versus the year before. Typical salary increments are usually said to be between 3-5 percent. Well, except for some talents who are harder to find and thus may be able to demand a salary increment which is many times higher. Else, 3 to 5 percent does seem like the typical.

“Malaysia has been showing a consistent uptrend of median salary increase, from 4.8% to 5.0% in the last two years, which is projected to continue to climb in 2024.” Source: humanresourcesonline.net

Now we read what is he benefit of the Progressive Wage Policy first.

Article in malaymail.com Balqais Yusoff, head of EPF’s Strategic Management Department told Sinar Harian in a report published today that its members’ savings have the potential to grow to RM64,500 by the age of 30, and RM512,500 by the age of 55, with a projected annual salary increase of 3 per cent.

“This is equivalent to a retirement income of RM2,100 per month. Annual salary increases can boost retirement savings by 54 per cent.

“If employers use the Progressive Wage Policy incentive of RM200 per month to increase basic wages, the member’s savings will increase to RM73,100 at the age of 30 and RM580,500 at the age of 55.

“This is equivalent to a retirement income of RM2,400 per month, nearly reaching the estimated minimum expenditure for an elderly person in the Klang Valley of RM2,500 per month according to the MyBudget study by the Social Welfare Research Centre, University of Malaya,” she was quoted as saying. Read the full article with more details here: Article in malaymail.com 

Salary Up, Productivity Follows? Or is it the other way forward?

What if the person is doing exactly the same thing, without any improvements, same way, same speed, same-same day in and day out? Truth is, except if the employer is the government, the private companies employing them will soon go out of business because competition comes from everywhere. Everyone is going to be doing better with every passing year. Less developed countries will be moving way faster. It’s not going to be a ‘pretty sight’ if our salary is way higher than others and yet the productivity stays stagnant.

I think I will let the policy makers think about this. Hopefully this question can also be addressed comprehensively too. If you ask me, any increment must be due to productivity increase which helps the company do better. Perhaps due to productivity, the business volume will increase faster than the manpower cost. If this happens, the company will be willingly paying a higher increment than even the market.

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