KUALA LUMPUR – The government’s proposal to allow contributors of the Employees Provident Fund (KWSP) to use their Account 2 also known as the Sejahtera Account for paying health insurance premiums has drawn caution from Datuk N. Sivakumar, President and Founder of the Malaysian Dynamic Sinar Kasih Welfare Association (DSK).
While the initiative is designed to expand healthcare access, particularly for the B40 and M40 groups, Sivakumar warned that such a move could undermine the long-term financial security of retirees.
“We’re trading long-term protection for short-term convenience.
“KWSP savings are meant to safeguard our golden years not to plug gaps in a healthcare financing system that should be addressed through proper national planning,” he said in statement.
He acknowledged the government’s good intentions in wanting to reduce reliance on the overloaded public healthcare system and alleviate the burden of out-of-pocket medical spending, which currently accounts for about 32% of the country’s healthcare expenditure.
However, Sivakumar stressed that insurance premiums are not one-off payments they are recurring, and grow with age, health risks, and the scope of coverage.
“This isn’t a simple transaction. When you start using your retirement funds to pay for monthly or annual premiums especially for your entire family it adds up fast,” he said. “Many contributors don’t realise they may end up depleting their savings long before retirement.”
Sivakumar called on the government to re-evaluate the existing health insurance landscape and consider introducing a more sustainable, tiered insurance scheme that reflects contributors’ income levels, age, family size, and risk factors.
“We need fair, affordable options not blanket policies that favour private insurers,” he added. “Some countries provide free-at-point-of-care services, meaning no patient pays a cent when seeking treatment. Malaysia already offers excellent public healthcare at minimal cost we must not make premium insurance feel like a mandatory lifeline.”
To protect contributors from making rushed financial decisions, Sivakumar proposed the integration of a smart filter into the KWSP i-Akaun mobile app. The feature, he said, should automatically assess a contributor’s financial readiness before allowing insurance purchases using retirement savings.
“Let contributors declare their income, number of dependents, and insurance plan of choice then let the app calculate the real impact on their savings. Show them what they’re really spending, and what’s left. That awareness alone can help curb poor financial choices,” he explained.
He also issued a strong reminder to insurance agents to act ethically and transparently when offering plans, particularly to vulnerable contributors.
“Too many are seduced by sales pitches without understanding the long-term consequences. We need honest conversations, not hollow promises,” he said.
Sivakumar concluded with a plea for caution:
“Retirement is not a luxury it’s a right. Let’s not rob Malaysians of that security in the name of quick fixes. Any policy affecting millions of hardworking people must be backed by data, compassion, and foresight not haste.” -MalayaDailyToday
