In case you don't know, there was a stimulus package announced by the interim PM to tackle the Covid-19 pandemic. In the stimulus package announced, one very important announcement was about the reduction of the monthly contribution to our EPF from the current 11% to 7%. The reason given was to help the rakyat to have additional cash to spend during the pandemic and stimulate the economy. But employees who would not want to reduce their contribution can inform their HR or Payroll department.
While the idea is good, I will always opt-out from reducing my contribution to my EPF. The main reason is that the 4% reduction would not make too much of a difference for my monthly expenses but will have a big difference for my retirement fund. Imagine that the 4% would be compound at the rate of 5% for 20 years. Let's take an example. If 4% is RM 100 and we accept the reduction for 6 months, we have RM 600 to compound for 20 years. The RM 600 will grow to become RM 1,591.98. That is an increase of 265.33%.
So, for me, the best thing to do is not to accept the reduction of 4% but to reduce our expenses in all other possible ways. Cook at home instead of eating out or call for delivery. It is many times cheaper. And since you would not be driving around, your petrol cost will be lower too. You may complain that the electricity bill will be higher but as long as you are not using air-con and water heater excessively, you would not have issues of very high bills.
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