Employee's contribution to EPF to reduce by 3% as RM7billion stimulus package unveiled

The government today announced an economic package to reinforce the economy, strengthen national resilience and to maintain economic growth momentum to face the increasingly challenging global economic climate. Finance Minister Dato' Seri Najib Razak said that the government would inject RM7 billion to strengthen the economy and boost confidence within the private sector as the country's projected gross domestic product (GDP) growth for year 2009 was lowered from 5.4% to 3.5%.

Among the measures Najib announced were :-
1) RM1.2bil to be allocated to build more low- and medium-cost houses;
2) Abolishing the 5% import duties on fertilisers, cement and steel;
3) Allowing hypermarkets to close late (weekdays 11pm; weekends 1am);
4) RM500mil for the maintenance of police stations and quarters, as well as Army camps;
5) RM200mil for Chinese, Tamil, religious and mission schools;
6) RM200mil for pre-school education; and
7) Employees can reduce their EPF contributions by 3% on a voluntary basis for up to two years.

The EPF contributions by employees will be adjusted from current 11% to 8% with effect from January 2009, on a voluntary basis. Just like the step the government took in 2003 but this time the statutory rate is lowered by 3% instead of 2% and for a period of two years instead of one. The employers’ portion of the monthly contributions to the EPF remains at 12%.

Why doing do? This measure is to give our people more cash in hand and spend in the market, although the 3% is not much to many. Now that it is optional, which way do you prefer? Save it in your EPF account or hold it in hand? Every sign is telling that we are going to face hard times, aren't we?