News

Sunday November 12, 2006

Few takers for pensions substitute

THE SUNDAY STAR SAYS

THE Government’s proposed Retirement Fund to replace the present pensions scheme had been drafted, proposed and rejected by Cuepacs. Civil servants prefer the present arrangements.

The positions and interests on both sides are clear enough, and their responses equally transparent.

The Government hopes to save with the proposed scheme, which requires civil servants to pay 11% of their income to the fund to match the Government’s 12%. This replicates the private sector’s Employees’ Provident Fund (EPF) arrangement.

But unlike the EPF, civil servants may not withdraw sums from the proposed fund for strategic expenditure like housing and education. This factor understandably makes the proposed scheme less saleable to the civil service.

Retirement then entitles civil servants to only 25% to 30% of their savings in the proposed fund, with the rest providing retirees a monthly sum. For many, this is unlikely to be adequate, especially given rising medical costs in old age.

Cuepacs officials have judged the proposed scheme and found it wanting – and said so publicly in no uncertain terms.

It is usually difficult to convince employees to abandon an established scheme for a new and unfamiliar one. This is particularly so in the case of the proposed Retirement Fund, since its added obligations have not been seen to be outweighed by any additional benefits.

Cuepacs has rejected what it has deemed inimical to its members’ interests. It would stand in better stead in the public eye if it could also be seen to provide constructive suggestions on cost-savings without impairing its members’ interests, or be seen as accepting the proposed scheme enough to bargain on it.

Still, the task of developing proposals as a substitute for the present pensions scheme falls mainly to the Government itself in finding alternative means to cut costs. The easy way is simply to shift the cost to employees, which amounts to passing the buck rather than solving the problem.

Does the Government need to budget so much on due payments to civil servants by risking damage to civil service morale and public goodwill? Would the Government itself benefit if it showed that it valued the work of civil servants less?

What will the US now become?

THE US mid-term elections have come and gone, but what do they all mean for Malaysians?

The vote and its implications have occupied much valuable airtime and print space. But while US political changes do impact on the world with superpower reach, few understand how this occurs for a country on the other side of the world.

The two key areas likely to be affected are trade and foreign policy. A chastened Bush White House and its Republican Party hinterland may become more conciliatory, given Democratic Party inroads in Congress following Tuesday’s vote.

But the expectation of great policy change is likely to be overdone. The same Bush White House is serving the same country with the same purpose and interests, although we wait to be convinced otherwise.

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