Year 2020 had just ended. Let’s be honest, closing accounts and declaring dividend is what we like most about Employee Provident Fund (EPF). As we all know, year 2020 was full of ups and downs and the challenges that EPF faces is no less than ours too.
Unlike the previous years, EPF is exploring an unconventional method for the dividend payment for year 2020. EPF is exploring the a tiered dividend system and it is aimed to help the low-income members to strengthen their retirement savings.
Understanding Tiered Dividend
Instead of a single rate being applied on all savings, a tiered dividend pays different dividend rates on the saving if it reaches a certain threshold. It is similar to the progressive tax system that we have now.
As reported in The Edge, it is expect that the low-income members to be the ones whom will be withdrawing their savings via the i-Sinar programme. Hence, they too, will be those that require more help to replenish their savings.
A tiered dividend system will pay a higher dividend rate to those with lower savings and a lower rate to those with higher savings. This can effectively replenish the funds for those who have been withdrawing money from EPF to sustain their living expenses.
At the first glance, this policy seemed to be giving sufficient assistance to the low-income members. However, it can be seen as punishing the rich too. For those who had contributed more to EPF are definitely expecting higher returns or at least not less.
Furthermore, the middle and high income members can withdraw their savings to meet the maximum threshold for the high dividend payout. This in return will cause EPF to bleed cash for these extra withdrawals.
The idea had sparked backlashes from the community and here are some of the responses from the netizens.
Do you support the tiered dividend idea? Share your thoughts below!