I QUITE agree with what S.M. Mohamed Idris of Penang has to say about the automatic reduction (from 11 per cent to eight per cent for two years from January 2009) of Employees Provident Fund contributions that Finance Minister cum Deputy Prime Minister Datuk Seri Najib Razak announced recently (”Better stick to 11 per cent” — NST, Nov 10).

The last time EPF allowed a similar reduction was in 2003 (a two per cent reduction for 12 months).

At the time, I opted to maintain my 11 per cent EPF contribution as I felt the extra two per cent was better left untouched in the fund to earn the yearly dividend, as the amount was not considerable enough to spend or justify a temporary contribution stoppage.

Currently, my monthly contribution rate is 13 per cent of my salary because when the EPF automatically reverted to 11 per cent after the one-year period, the extra was automatically added to my 11 per cent.

That was fine with me as it was for my retirement.

This time I will again be sending in the Form KWSP 17A (AHL) to EPF as I intend to maintain the 11 per cent contribution.

The soon-to-be-implemented three per cent cut plan may or may not benefit EPF members, but from my point of view, it is better not to accept the offer and let the savings accumulate through the dividends declared annually, even though the rate could be less than five per cent.

Whether the three per cent translates into a small or big amount for members of the fund to spend does not matter.

What matters is that come retirement day there is sufficient money in the member’s account to allow him to live comfortably.

MOHD FAIZAL ABDULLAH, Kuala Lumpur

Source: NST – November 14, 2008