KUALA LUMPUR, 4 Nov 2008: In a move to put more disposable income in workers’ pockets, the government will allow workers to reduce their Employees Provident Fund (EPF) contribution by three percent for two years beginning 1 Jan 1 2009.
Currently, employers contribute 12% to EPF while the employees contribute 11% of their salary to the national savings fund.
In announcing this, Deputy Prime Minister Datuk Seri Najib Tun Razak said: “With the reduction, the level of contribution is still at a very reasonable 20%, with employers contributing 12% and employees 8%.”
“A person with a salary of RM2,000 a month will get RM60 extra in disposable income, while someone earning RM6,000 will get an additional disposable income of RM180 a month,” Najib, who is Finance Minister, said when winding up the debate on the 2009 Budget at the Dewan Rakyat.
Should all the contributors volunteer to reduce their EPF contribution, the amount involved will come up to RM4.8 billion a year, he said.
Assuming that only 50% of the contributors take up this option, the level of private consumption spending will increase to RM2.4 billion, he added.
To make it easier for civil servants to own a car, the government will also increase the limit for car loan eligibility, as follows:
> For the JUSA grade, the limit is increased from RM60,000 to RM70,000;
> For grade 41 to 54, the limit is increased from RM55,000 to RM65,000; and
> For the support group, the limit is increased from RM45,000 to RM55,000.
“Civil servants will also be allowed to take housing loans for real estate in the secondary market where the strata titles have not been issued,” said Najib.
He said the government had also announced that the repayment period for all new housing loans for civil servants had been extended from 25 years to 30 years.
“To ensure that existing borrowers enjoy the same facility, they would be given the option to extend their loan repayment period to 30 years. This will help increase their disposable income.
Najib said the government, through Bank Negara, would also urge banks to consider allowing borrowers to restructure their loans. — Bernama