THE NEED TO KEEP RAISING THE RETIREMENT AGE

PM Tun Mahathir, 93, has jokingly said the new retirement age in Malaysia will be 95 in 2020 when he hands over his premiership to Datuk Seri Anwar Ibrahim. He may have said it in jest but at the rate our demographics are changing, Malaysia will reach ageing nation status by 2030, and we will see more people working well into their 70s.

When the Employees Provident Fund (EPF) was established in 1951, life expectancy then, believe it or not, was 55! With the retirement age set at 55, lump sum EPF withdrawals would be more than sufficient to sustain contributors through the short retirement period. We now know those figures were way off the mark. Advances in science, medicine and technology have drastically extended life span. Life expectancy in Malaysia currently stands at 75, and is set to rise further in the years ahead. 60 is the new 40, and living to a ripe old age of 80 and beyond is fast becoming the norm.

This begs the question - do we have enough in our EPF savings to see us through an additional 15 to 20 years? For the majority the answer is No. The M40 (middle income group) is arguably the worst off as they are not eligible for welfare aid unlike the B40 (lower income group). They also have more financial commitments such as these below:

• loans to service (housing loan, car loan)
• their children's higher education 
• their healthcare expenses
• support for their elderly parents

Do check out what these senior citizens from M40 have to say about their financial status, and what we can learn from them at this link. Their profiles are typical of most retirees.

Upon reaching 55, most retirees would opt for lump sum withdrawals. They have worked hard and waited patiently for the day when they would have the means to turn their dreams and plans into reality, whether it is to pay off debts, renovate the house, take a well-deserved holiday abroad or start a business. Unfortunately, going by EPF data, most end up depleting their retirement savings within a few years mainly through mismanagement of their money.

How much should the average retiree have in order to avoid getting into debt? EPF puts it at RM228,000. More than half of their members have way less than this amount (see infographic below). EPF has come up with some good advice on how to live a simple and sensible life in retirement to stretch savings. If a retiree finds himself unable to cope financially, he should pay a visit to AKPK (Agensi Kaunseling dan Pengurusan Kredit) for some free advice on how to manage his limited financial resources. Or refer to AKPK's special presentation for SeniorsAloud members at this link.

Read the full article at this link.

To reduce the risk of retired contributors using up all their EPF savings within a few years, EPF introduced several withdrawal packages (see below). There is also the option of leaving the entire sum with EPF until age 100 and still enjoy dividends. At dividend rates of 6% and above since 2011, it makes sense for retirees to let their savings remain for as long as possible with EPF. The dividend for 2017 was 6.9%.

Read the full article at this link.

Many of my friends who were teaching in public schools back in the 1980s opted for early retirement when they reached their 40s. As long as they had served a minimum of 10 years, they were eligible for a gratuity and pension benefits as stipulated under Section 12A Act 227/239. Today early retirement at 40+ would be unthinkable for most people. Given the rising cost of living and a host of financial commitments, few can afford to enjoy full retirement. The mantra is work, work, work for as long as possible.

Acknowledging the plight of retirees and those nearing retirement age, the Pakatan Harapan government has sought to increase job opportunities by proposing tax incentives for employers hiring older Malaysians. It's a long shot from proposal to implementation. Whether this will make a significant difference remains to be seen.

Source: Budget 2019

One thing is for certain - we can expect the retirement age to continue going up. In developed countries such as Germany and Japan, the retirement age is moving towards 70. Former PM of Singapore, Lee Kuan Yew, famously said that 'retirement means death', and was in favour of doing away with the retirement age.

As the country's biggest employer, the government finds it a challenge to fund pension payouts to a growing pool of retired civil servants and beneficiaries that is expected to reach 836,000 in 2019 and would cost KWAP (Kumpulan Wang Persaraan) a whopping RM26.56 billion. This is one of the main reasons for raising the retirement age - to enable both retirees and pensioners to work longer and accumulate sufficient savings to be self-supporting in old age.

Read the full article at this link.

Older Malaysians too want to work for as long as they are able. The family structure has changed so drastically that parents can no longer expect their adult children to support them in their old age. Family size has shrunk, and with the grown children moving out to work or settle elsewhere, retired couples are often left to fend for themselves.

The falling fertility rate at 1.9 is the lowest on record and below the replacement rate of 2.1. This means a shrinking of the young work force. This shortage of young workers will have to be met by an increase in technology, in the recruitment of foreign workers and in opening jobs to people in the 60 to 65 age group.

So, whichever way we look at the situation, there is definitely a need for older workers to return to the work force, and for the retirement age to be raised. The likelihood of doing away with a retirement age will gain traction in the years ahead. Let's just hope it won't reach a situation where we have to work till we drop dead!

PENSIONS & RETIREMENT FUNDS - A LOOMING CRISIS?

Poster calling attention to four
demands

I have just listened to Roy Ngerng's speech delivered at Hong Lim Park, Singapore, on 7 June, 2014. All 46 minutes of it. For those interested, there is a transcript plus a Chinese translation posted on his blog at The Heart Truths.

This CPF (Central Provident Fund) minimum sum (MS) issue has become such a hot potato of late. While I can understand where Ngerng is coming from, I can also see why the issue is not that straightforward.

The mandatory minimum CPF contribution has been rising steadily over the years to keep up with inflation. According to figures on the CPF Board website, when a CPF contributor reaches the age of 55, say, by 1 July 2014, he should have the minimum sum of S$155,000 in his CPF.

If he doesn't, any property he owns, bought with his CPF savings, will be automatically pledged for up to half of his MS. The Singapore government sees this as making sure Singaporeans have enough in their CPF to support them in their old age.

Protesting against Singapore's CPF Pension Scheme (Photo: Wall Street Journal)

Source: Central Provident Fund Board

If a contributor is nowhere close to having the MS in his CPF, he will be looking at the real possibility of working for as long as his health permits, perhaps till he drops dead.

Many of the elderly in Singapore, the 'pioneer generation', fall outside the CPF scheme. That is why silver-haired cleaners and dishwashers in their 70s and 80s are a common sight in this rich island republic. They have to take whatever jobs are available to survive.

CPF contributors have been earning 2.5% interest on their savings since 1999 (see chart). In Malaysia, the interest EPF (Employees Provident Fund) pays varies depending on how well (or not) their investments have performed. This year, the interest was a relatively high 6.35% (see chart). It is easy to see why Singaporeans are not too happy with the low interest rate of 2.5% on their CPF savings.

While Malaysian EPF contributors are delighted with the high interest of 6.35%, it is doubtful whether this can be sustained in the years ahead. Countries the world over are facing problems with underfunded pension schemes and retirement funds. It is a looming retirement crisis that has already led to street protests across Europe, the US and Asia.

A bit of background history may help to shed some light on how pension / retirement / funds have reached this critical stage of crisis. Back in the 1940s and 50s, governments set up social security schemes to encourage workers to save for their old age. The retirement age was set at 55, based on the assumption at the time that most people wouldn't live beyond 65. While the intention was good, they did not foresee the rapid socio-economic changes that would impact demographics and adversely affect retirement savings, namely:

Source: How a declining birth rate affects you

• longer life expectancy (retirement savings would not be adequate to support a longer period of old age)
• falling birth rate (this means a smaller work force to support a growing older population). In Singapore, for example, the fertility rate has dropped to an all-time low of 1.2
• smaller family size (there are fewer siblings to share medical expenses and financial support for their aged parents)

Most governments facing this dilemma have resorted to raising the retirement age. While some have welcomed this stop-gap measure as it allows them to remain employed longer to support themselves, there have been demonstrations worldwide to protest the rise in retirement age.

In Singapore, for example, the retirement age has crept up from 55 to 60, 65, 67 and now to a proposed 70. Raising the retirement age lessens the government's burden of providing welfare for a rapidly growing older population.

However, CPF contributors are understandably unhappy. They have been waiting to retire and withdraw all their CPF savings. After all, it is their hard-earned money, and they have made plans for what they want to do with the lump sum. 

Source: The Star

A word of caution here. Retirement savings are meant to support you in your old age. It is not intended to help you pay for home renovations, your children's weddings, or holiday trips abroad., unless you have enough set aside for these expenses. Before you know it, all the CPF/EPF money is gone, and you will have no choice but to seek re-employment to support your remaining years.

Source: The Online Citizen

With the silver tsunami set to hit countries across the globe, governments will have to come up with innovative measures to ensure they have enough in their employees provident funds or social security funds to pay out to contributors.

A case in point - will the Malaysian government be able to continue forking out massive sums in monthly pensions to retired civil servants? At 1.4 million, it has the largest civil service in the world relative to its population, and it is still hiring in large numbers. The country has a population of 28 million and there are approximately 12 million people in the workforce, but only 1.7 million pay taxes. (The Star). Ponder on that.

Source: Bloomberg

Ngerng is right in demanding transparency and accountability from the government. Workers want to know how their government is investing their retirement contributions. What are the ROIs?

(See update below.)

Source: The Star 12 June, 2014

All governments have a moral responsibility to provide for their citizens, especially the elderly. But are they able to? That is the burning question that begs an answer. FAST.

Do watch this series of videos below to get a better understanding of why we might have to say Goodbye to Retirement as we know it.

SAY NO TO PREMATURE WITHDRAWAL

Report in The Star 16 August 2012

This post is mainly to keep a record of public announcements made by the EPF on the issue of withdrawals. Decisions made in haste without sufficient time to hear the views of all stakeholders often result in the authorities involved having to retract their earlier statements. This 'flip-flopping' is a waste of public funds and manpower hours. The current public outcry against the unpopular amendment (section 114a) to the Evidence Act is a case in point.

Report in The Star 16 August 2016

The Star columnist P. Gunasegaran gives his views on why he thinks the EPF announcement defeats the purpose of raising the retirement age from 55 to 60. If EPF contributors are allowed to withdraw the full sum upon reaching 55, they risk having insufficient savings to see them through the next 15-20 years of retirement.  I fully support Gunasegaran's views.

Do read his article.

Related post:

Why it makes sense to leave your money in the EPF

WHY IT MAKES SENSE TO LEAVE YOUR MONEY IN THE EPF

While awaiting the EPF Act 1991 to be amended which will likely take three to five years, contributors can still withdraw the full sum at the old retirement age of 55.

When the government raised the retirement age for the private sector from 55 to 60, contributors to the Employees Provident Fund (EPF) were concerned about whether they would have to wait an extra five years before they could withdraw their EPF savings in full.

Based on views expressed in the media, many are unhappy with the government's proposal to amend the EPF Act of 1991 to allow only partial withdrawal of EPF savings at the age of 55, and full withdrawal at 60.

There are contributors who are happy they can now work longer and accumulate more savings in the EPF. There are also those who have retired and are content to leave their EPF funds intact until such a time when their EPF savings no longer earn interest. Last year a 6% dividend was paid out to EPF contributors. That is way more than the interest paid by banks.

Would you get this much if you saved with a bank? Makes sense to leave your money in the EPF for as long as possible. It's risk-free as by law contributors are guaranteed of a minimum return of 2% .

On the other hand, public opinion seems to be in favour of lump sum EPF withdrawal at 55. Some of the reasons cited by EPF contributors include the pressing need to:

• clear their debts and housing mortgage
• pay for their elderly parents' medical treatment
• start a small business
• invest in shares, business ventures
• renovate the family house
• upgrade to a better car
• finance their children's post-graduate studies
• contribute towards their children's wedding expenses
• help their children with the down payment on their first home

Our EPF contributions make up our retirement nest egg . Will we have enough to retire on for the next 15 years or more, given that the average life span of Malaysians is now 75? If we withdraw our savings and spend some of it on any of the reasons listed above, how much is left for us to live on?

Adult children should not take for granted that Mom and Dad will help them with their debts and financial commitments. They should remember that Mom and Dad may have no other income to draw on, and they may still have Grandma and Grandpa to support.

As for using EPF funds to start a business, conventional wisdom says "Don't do it!". Without the essential business know-how and with age against them, retirees are likely to end up losing every single ringgit they have invested in the business venture. Only a handful will succeed in business after retirement, regardless of what wealth gurus may tell them.

To many new retirees used to drawing a 4-figure salary, suddenly having their hands on hundreds of thousands of ringgit makes them feel rich and reckless. Prudence goes out the window, with frugality hot on the heels. No wonder all their retirement savings are gone long before they themselves are gone!

Remember, EPF savings are for our old age.

If you think you can manage your EPF money wisely and even make it grow, by all means take out every sen from the EPF. But if you don't have a good track record of money management, or are adverse to risk, hold off touching your retirement nest egg till you are fully retired. Many retirees seek a second career and continue working till 65 or even 70. Your EPF savings are meant for your old age, in case there's no one to look after you and your needs. Sustain yourself on other sources of funds, including drawing from your bank accounts, interest from FDs, or dividends from shares and unit trusts. If you don't have enough saved, you have little choice but to work for as long as you are able to.

Welcome to the harsh reality of retirement. The truth bites!

AN EXTRA FIVE YEARS TO GROW OUR GOLDEN NEST EGG

Front page of the Malay Mail today (14 June 2012)

A bit too late for me, but good news for those about to reach the current retirement age of 55 for the private sector. An extra five years can mean additional money for our golden nest. With the ever spiraling cost of living eating into our limited retirement savings, every ringgit counts.

Our generation of baby boomers (those born between 1946-1964) are enjoying longer life expectancy, with 76 years the average for Malaysians. It is ridiculous to retire employees when they reach 55. How are they going to support themselves for the next 20 years or more? How many of us would have at least RM1 million in our EPF at age 55? That's the minimum we would need to continue maintaining our current lifestyle after retirement. Those who withdraw all their EPF savings in one lump sum will use it all up within three years. These are statistics released by EPF based on surveys they have conducted.

From a slide presentation given in June 2010 by EPF's general manager. The figures have probably gone up since then given the escalating cost of living.

Older workers, both professionals and blue collar employees face age discrimination. If you are retrenched or retired, the odds are against you when it comes to re-employment. That is why many use their retirement savings to start their own business and become self-employed.

However, not everyone is in favour of raising the retirement age. There are older folks who can't wait to withdraw all their EPF money for whatever personal reasons. After all, it is their hard-earned money and they have a right to do whatever they want with it. They don't want to wait another five years to be able to do so.

There are also the younger work force who argue that retaining older staff means depriving them of career advancement opportunities. Think of it this way. Wouldn't they want their parents to be financially independent for as long as possible?

We can look at the issue from all angles, but in the end, the pros of raising the retirement age far outweigh the cons. This issue has been covered numerous times on this blog. Here is a sampling - click on the links to read.

Related articles:

A Daily Struggle To Survive
Can We Afford To Retire?
Not Ready To Be Put Out To Pasture
In Praise of Older Workers

HANDS OFF MY EPF SAVINGS!

Report in The Star 15 March

Honestly, some of the things the government does makes no sense. Take the latest example. The government launched the My First Home Scheme in March 2011 to help young working adults own their first home. Banks were supposed to provide 100% loans for houses costing up to RM200,000 (for single applicants earning up to RM3k a month), and up to RM400,000 (for couples with a joint income of up to RM6k a month).

A year on, Bank Negara has issued a statement to say that half of the applicants from a total of 1062 do not qualify. The main reason - they failed to prove their ability to repay the loan due to poor credit history and non-sustainable income. (For details of eligibility criteria, click here.)

Not surprising. Which bank would want to lend to borrowers who have a high risk of defaulting on their repayments?

Time to crack the whip? Hah! Yet another empty threat.

Meanwhile, over in Petaling Jaya, the PJ City Council (PJCC) is threatening to evict defaulters of their public housing scheme. Tenants of the low-cost apartments in Taman Putra Damai, Subang and in PPR Kota Damansara owe a total of RM10 million in arrears. Despite the low monthly rental of RM124 for a 3-room unit, many tenants still don't / won't / can't pay up.

The defaulters have been issued several reminder letters, but they have chosen to blatantly ignore all these reminders. You can be sure they will similarly chuck the eviction notice in the trash bin.

The EPF is flushed with money and currently holds RM470 billion in assets.

The crux of the problem is the half-hearted attempts by enforcement officers to impose penalties, coupled with the habit of bending over backwards to accommodate defaulters. PJCC is prepared to discuss payment arrangements including accepting instalments. PJCC wants to wield the stick, but at the same time doesn't want to be seen as the bad guys. The result? PJCC is perceived as a toothless tiger that no law-breakers would take seriously.

The same goes for most government agencies. They make poor bill collectors. And so the losses keep mounting. Billions of the rakyat's money washed down the drain. No chance of recovering it. The same thing with student loans.

FT Minister (Pic: Malaysian Insider)

Unfortunately these financially painful lessons are not learned. And the long history of mistakes repeats itself. A case in point - Kuala Lumpur City Hall (DBKL) recently announced that RM1.5 billion of EPF funds will be used to finance DBKL's low-cost housing scheme. Federal Territories Minister Datuk Raja Nong Chik said the ministry had already offered the loan to 24,000 City Hall low-cost housing tenants. The funds will be disbursed by June or July this year.

For sure, no commercial banks is prepared to finance these high-risk loans. The solution? Turn to the EPF. It's the government's second piggy bank after Petronas.

But EPF funds belong to people like you and me who have worked hard to put aside some savings for their retirement years. Should we be concerned that City Hall is digging into our retirement pie without so much as a "May we?" to ask for our permission? Have we no say in where our money goes?

Based on the poor track record of low-cost housing defaulters, we can probably say Bye-Bye to the bulk of the RM1.5 billion. What happens if these "eligible" applicants later find themselves unable to keep up with the repayments? Or worse, refuse to honour their part of the contract even though they can afford to?

How safe are my EPF savings? Of course, DBKL will assure employees and retirees that there is no cause for alarm. What would be your course of action if you had savings with the EPF?

It's obvious, isn't it?

A DAILY STRUGGLE TO SURVIVE

It is a fact that many retirees are struggling to cope with their living expenses. A survey carried out by the Employees Provident Fund (EPF)in 2004 showed that 99.9% of contributors withdraw all their savings in one lump sum after they retire at 55. 70% of them deplete their EPF savings within three years of withdrawing the money. Given the average life expectancy of 75, how are these retirees going to support themselves for the next 20-30 years?

A recent article in The Star suggests that Malaysians need to have at least a million ringgit in cash reserves upon retirement to enjoy the lifestyle they are accustomed to before they retired. RM1,000,000 is a lot of money. How many of us have that kind of money saved?

Source: The Star. Click here to read more.

We can’t expect our adult children to support us indefinitely. They have their own financial commitments to deal with. The best way to help them is to be able to support ourselves. So can we afford to retire? Absolutely NO. But do we have a choice when the mandatory retirement age is 58, even though this has been raised from 55? How many companies will hire us at 58 even if we are able to work and contribute?

So the daily struggle continues. The fortunate ones are those who have planned well ahead for their retirement, have money to invest in shares or have generous children to fall back on. For the rest of us, it’s a case of no money coming in, but much money going out.

Retirees need to spend on food, dietary supplements, medicine, transport, utilities, mortgage payments and insurance premiums. The situation is compounded if they have elderly parents to care for, or children to see through college or university.

Depending on the lifestyle a retiree would want to maintain, whether he has any dependents to support, and whether he lives in the city or small town, he would need anything from RM500 to RM2000 a month to survive on. The numbers are a conservative estimate.

The bottom line is this: Retirees just can't afford to retire. They can’t even afford to get sick, considering the hefty costs of health care and hospitalization. Those on government pension may have access to free medical and dental benefits, but there are millions more who are left in the cold to fend for themselves.

Singapore plans to raise the retirement age to 65 in 2012, and eventually to 67. Britain is considering scrapping the compulsory retirement age. Elsewhere the trend is towards extending the retirement age to enable older workers to continue supporting themselves, and not be a financial burden to their children.

Of course, if you are a billionaire in Asia, you can choose to retire and enjoy the fruits of your labour. Or continue working and make more money faster than you can spend it. Now that would be every retiree's pipe dream.

Financial education should start in school, as an integral part of the Living Skills curriculum. To go one step further, the government, in collaboration with the private sector, should consider issuing a senior citizen card for those who are eligible. This card would enable them to enjoy free or discounted fares, healthcare, basic food essentials, pharmaceuticals, and other elderly-related services and products.

I know of a pharmacy and a food chain that issue a special discount card for seniors. Kudos to them. However, there shouldn't be too many terms and conditions attached for card-holders. Otherwise it defeats the purpose of helping them. Also, it makes more sense to have a all-in-one privilege card. It can be quite cumbersome to carry a dozen discount cards in my wallet each time I go out.

It’s high time the welfare of our senior citizens be given priority, and not just token attention every now and then. We have been an overlooked and neglected lot for much too long.

FEELING THE COLD AND THE PINCH IN GERMANY

Braving the cold at a Christmas fair in Cologne.

My first visit to Germany was in December 1998. Last month, I returned for a more leisurely visit. During my one week in Cologne, I had the opportunity to talk to some senior citizens about how they viewed retirement. One can learn a lot from such exchanges with seniors from other countries. Hmm.. maybe it's time we had a World Seniors Summit, just like the World Economic Forum in Davos, Switzerland, but minus all the finger-pointing and blaming.

Christmas eve dinner

Over a Christmas eve dinner at his home, I asked Dr Erhard Schelzke, 73, how he views his retirement. A professor at one of the public universities until he retired some years ago, he says, "A lot depends on how well-prepared you are, how much you managed to save during your working years."

Dr Schelzke providing some Christmas cheer on his violin.

Dr Schelzke is enjoying his semi-retirement years as a part-time entrepreneur consultant at the university. When not at work, Dr Schelzke spends his time reading and playing his violin. The latter is a passion that has been with him since he was 10. He hopes to raise enough funds to start a violin school for children.

Unlike Dr Schelzke, Manfred Luer, 70, works six days a week running his family jewelry business together with his partner, Ursula, 66. Both have accepted their impending retirement, but are not looking forward to it. "The business has been such a big part of our lives. With the global economic downturn, it's getting harder for small businesses like ours to survive. But we will carry on as long as we can."

Manfred and Marcus Luer

Then there is 83-year old Marga Linden. She is seldom seen without her trusty bicycle, which takes her wherever she needs to go in the suburbs where she lives. "My knees are starting to act up," she complains. Life has been much quieter since her husband passed away in 1975. Not one to stay home and mope, she meets with her girl friends regularly, and does grocery shopping for those less mobile than she. She takes retirement in her stride, and is determined to remain physically and financially independent.

With long-standing low birth rates and increasing life expectancy, compounded by the high rate of unemployment in recent years, Germany's pension system is under much pressure. Simply put, there just aren't enough young working adults to contribute towards the old age pension system for the burgeoning number of workers who retire.

Some reforms introduced by Chancellor Angela Merkel to give the government more time to work out solutions include raising the retirement age from 65 to 67, and extending the minimum years of work service from 40 to 45 to be eligible for pension benefits. Not everyone is happy with these reforms.

In Malaysia, similar 'reforms' have been implemented. The retirement age for civil servants has gone up from 55 to 57, and the years of service from 25 to 30 to be eligible for pension benefits.

Here in Malaysia, workers earning less than RM3000 must contribute to SOCSO (Social Security Organization). Their employers also contribute to SOCSO. Benefits include coverage for work-related injuries and medical insurance. SOCSO contribution is optional for those earning more than RM3000, but the consent of the employer is required.

Those earning above RM2500 have to pay income tax and contribute to the Employees Provident Fund (EPF). Their employers also contribute to the fund. There is currently no mandatory contribution to medical insurance. Whether this will change in the near future is anyone's guess.

Compare this with workers in Germany who pay not only income tax, but also contribute to health insurance, long-term care insurance and unemployment insurance. Workers and their employers each pay equal amounts into the old-age pension system. This works out to about 19.9% of an employee's gross earnings.

The level of pension to which people are entitled is based on what they have earned over the whole of their working life and is currently at the level of about 68% of their last drawn salary. So the more a worker contributes during his working years, the more pension benefits he enjoys in his retirement.

Click here to find out the different approaches taken by other countries to deal with the pensions crisis. There might be lessons Malaysia can learn.

HOW TO MANAGE YOUR DEBTS

If you have sufficient funds set aside for your retirement, you can look forward to your golden years with some peace of mind. However, the majority of us are probably still struggling to pay off housing loans and car loans. There is also the credit card debt to settle each month. The adult children have their own financial commitments to deal with as well, so we can’t expect much monetary assistance from them. There’re also medical expenses to cover, and expensive health supplements to purchase. Meanwhile, we watch the price of our shares on the KLSE nosedive, and wonder how much longer we can keep our heads above water. Circumstances like these can drive the hapless and helpless to consider taking desperate measures like seeking out Ah Longs – or worse.

So where can one turn to for some professional financial counselling? Try Agensi Kaunseling Dan Pengurusan Kredit (AKPK). It is an agency set up in April 2006 by Bank Negara Malaysia to provide financial education, credit counselling and debt restructuring services to individuals. All services offered by AKPK are FREE. Now that’s what I call public service.

I checked out the website and came away quite pleasantly surprised at the services offered. You can even download for free the e-book "Money $ense - Getting Smart With Your Money" to acquire the skills to manage your money wisely.

According to AKPK, if the following list applies to you, you are in need of financial counselling.

If you are not in control of your money;
If you have more debts than you can manage;
If you are living from paycheck to paycheck;
If you are only able to pay the minimum 5% on your credit card bills;
If you are taking cash advances from your credit card to meet your expenses;
If you do not have any savings to meet personal or family emergencies;
If you have debt collectors calling you regularly;
If you are being served legal notice of demand.

Here are some tips from AKPK on how to manage your debts:

· Calculate your total debt to income ratio – if your repayment exceeds 30% of your gross income, then you might want to start clearing some of your liabilities.

· Split your debts into “good” and “bad” categories. “Good” debts are considered necessary investments or debts that create value like home mortgages, business loans and education loans. “Bad” debts or consumer debts are for credit purchases that decrease in value with no potential to increase like buying a plasma TV set.

· List your debts from the highest to the lowest interest rate charged. Set a realistic repayment structure and a time frame within which to pay off your bad debts, starting with those with the highest interest rate charged.

· Limit yourself to one or two credit cards. Settle your credit card bills on time and in full.

· Restructure your debts. Look around for the most competitive interest rates and loan packages.

· Set a monthly budget and stick to it

· Curb your spending habits. Turn over a new leaf to avoid getting into debt again.

There are many sources of funds other than your pension or EPF. Perhaps your life insurance would have now matured. Consider selling your big family home, especially if its value has doubled or trebled; since your children would have left home by now. You could comfortably live in a smaller home with lower maintenance and the surplus from the house sale is yours.

To find out more about the Debt Management Programme (DMP) before you register for it, just attend the daily briefing at the AKPK office in Kuala Lumpur, Penang or Johor Bharu. Call their toll-free number at 1-800 88 2575 for more information.