Sunday, November 23, 2008

Read This First Before You Make Your Decision

If your pay is about RM4,500/month, and you have no life insurance, you will actually pay more taxes if you decide to reduce your EPF contribution to 8%.

That's because up to RM6,000 of EPF contributions and life insurance premiums are tax-deductible. Here is the calculation:

You earn RM54,000 per year. 11% EPF = RM5,940, which is tax-deductible. There is also RM8,000 of personal relief. So your net taxable income is RM40,060.

The tax on that will be RM2,183 (tax rate is RM1,525 on the first RM35k and 13% on the next RM15k).

The EPF contribution is reduced to 8% = RM4,320. That is equal to RM1,620 extra in your pocket every year. Very nice? Did you realise that's not all yours?
That extra is now taxable income! So your net taxable income is RM41,680 and you will be paying RM2,393 of federal income tax.

The IRD will be taking an RM210 (RM2,393 vs RM2,183) of taxes from you ie 13% of that extra which you thought was all yours. Of course, the better-paid employees with hefty life insurance premiums are already well over the RM6,000 ceiling for tax-deductibility, so they won't be affected. But aren't these measures supposed to help the poorer?

Is that why the government made the 8% option automatic? Perhaps you'd better head over to EPF and insist you want to keep paying 11%.

Saturday, November 1, 2008


This is another method for KWSP to steal our money!

Remember during Budget 2008 announcement last year, our Finance Minister (cum PM) announced that in order to assist KWSP members to reduce the burden in housing load repayment, KWSP will allow monthly withdrawal from members' A/C II for the purpose?

Sounds like a nice goodies!When you apply for the monthly withdrawal, you only need to provide KWSP your housing loan & instalment details from your bank and the bank a/c number you like KWSP to bank the monthly withdrawal into it. KWSP will approve yourr application based on the available amount in your A/C II and compute the withdrawal period by dividing the approved amount with the monthly instalment amount. Application process takes about a month and you will receive the monthly payout promptly into your bank a/c! Well everything appear to be nice and good.

It was indeed a noble plan until you take to close look at your KWSP Statement! The withdrawal plan is actually a SCAM!
This is how the KWSP SCAM works.......Assuming you have RM100,000 in your A/C II and your housing loan's monthly instalment is RM2000/mth. KWSP will approve your application of withdrawal from your A/C II of RM100,000 and pay you RM2000/mth for the next 50mths. Everything appears to be in order BUT.......What KWSP didn't highlight to you is that when the application was approved, the TOTAL AMT (RM100,000) is removed from your A/C II! It appears to be transfered to an unknown a/c to effect the monthly payment from therein.

The impact to the member are as follows :

  • You just lost RM100,000 from yr A/C II. Assuming the KWSP Dividend is 5%, you will lose >RM4,000 in dividend during the 1st year. Based on the above example you will will lose >RM10,000 over the 50 mths period!

  • There is no statement to account for the amt approved vs amt paid, hence you would need to keep the monthly payment voucher to reconcile against the approved amt over the 50mths period to ensure there is no missing amt!

Assuming there are 100,000 members who innocently fell prey to this SCAM, based on the above example, KWSP would have cheated the members of 100,000 X RM10,000 = RM1,000,000,000 (that's RM1 BILLION) over the period!

Furthermore, if you discovered this SCAM early and intend to stop the plan, KWSP would not allow any cancellation of the plan until at least 1 year. That would mean, once the application is approved, based on the above example, you would have lost >RM4,000.100,000 members would have lost 100,000 X RM4,000 = RM400,000,000 (RM400 MILLION) in One Year!!!If you're a victim of this KWSP SCAM, would suggest you call your MP to raise hell in Parliament! (BN MPs won't do it)

For others who have not fallen into this SCAM, pls continue to watch out and alert your family & friends about this.