Saving up for retirement in the gig economy can be tricky, but with EPF i-Saraan, you will be able to take a load off your mind.
Being self-employed can often feel less restrictive than working for an employer, and it’s this freedom that gives workers a sense of flexibility and control that they won’t get from a full-time role. This gig economy has resulted in more agility for both employers and employees alike, and it’s only set to grow even further — while a gig used to be a colloquial term for a music performance, it’s now more commonly associated with paid work on a short-term, temporary, or freelance basis.
With more Malaysians looking to move on to such short-term and freelance roles, it’s more important than ever to ensure that they don’t lose out on one advantage a permanent job can provide — a safety net of savings that can help in uncertain times.
“As more Malaysians join the gig economy, the low understanding of income protection and insurance will be an increasing cause for concern,” says Zurich Insurance Group. “This self-employed group is exposed to irregular income and is susceptible to income loss when they are unable to work due to even the slightest of situations such as having the flu or family bereavement.”
There is no better example than the disruptions to business operations caused by the global spread of Covid-19. The outbreak has already affected businesses globally, with many companies facing revenue losses due to cancelled orders, postponement of events and shuttered factories . With greater uncertainty during this time, gig workers may find it even more challenging to cope with the decrease in work without the safety net of a permanent job and social security savings.
This is why a retirement scheme like Employees Provident Fund (EPF) i-Saraan can be beneficial to this group of workers. A voluntary contribution to this retirement scheme will be able to take a load off worrying about saving up for the future.
A little goes a long way
Previously known as SP1M (Skim Persaraan 1 Malaysia) Retirement Savings Scheme, the EPF i-Saraan is a Voluntary Contribution with Special Incentive for those who are self-employed and do not earn a regular income as a salaried employee. Members under this scheme will be able to make contributions of up to RM60,000 per year towards this i-Saraan account. Dividend is guaranteed at a minimum of 2.5 per cent.
This scheme will provide a host of benefits for the self-employed, and members will receive a 15 per cent special incentive (capped at RM250 per year) of members’ annual contributions.
A minimum amount of RM1 is required, and submitting your contribution is easily done via Internet banking, at the EPF’s appointed banks or through BSN registered bank agents nationwide. The best part? You will be eligible for withdrawal schemes and get to enjoy the same benefits as EPF members.
The Covid-19 outbreak has driven home the importance of saving up for rainy day. By committing to the EPF i-Saraan scheme, gig workers will be reap the benefits of a retirement savings plan.
Contribute as low as RM1 at any time and within your own financial ability, and enjoy the benefits of being an EPF member. The maximum amount of contribution is RM60,000 per year.
Earn annual EPF dividend on your retirement savings
Receive additional special incentive of 15 per cent subject to a maximum of RM250 per year.
EPF Dividends: until age 100
EPF Death Benefit: RM2,500 *subject to EPF terms and conditions
EPF Incapacitation Benefit: RM5,000
EPF Tax Exemption
HOW TO APPLY
In order to open an i-Saraan account, you need to meet all the eligibility requirements and use your MyKad to submit an application form.
To be eligible for i-Saraan, you need to be a Malaysian citizen who is below the age of 55, registered as an EPF member, and self-employed.
From freelancers to Uber drivers and even independent photographers, writers and consultants, members of the gig economy keep the world of commerce spinning. Who are these trailblazers on the road to an independent living? Research has indicated that a single identity is hard to pinpoint.
What we can glean from the Gig Economy Data Hub are mostly demographics. There are more gig workers in the 16- to 35-year-old age group than you’d find in a traditional workforce. However, younger generations have not cornered the freelance market. When it comes to the providers of skilled services, the average age skyrockets to over 55, according to data from ADP.
The gig economy represents a growing and vibrant sector. The “Freelancing in America” study conducted by Edelman Intelligence told us that 57 million people were freelancing in 2020, making up 36% of the U.S. workforce.
Given the size of the market, gig workers are a new frontier for credit unions, and represent an area where challenger banks are already actively courting new commercial customers. For traditional financial institutions to seize a share of the growing pie, they must first evolve strong digital capabilities and a deeper understanding of the freelancer in today’s economy.
Understanding the Needs of Today’s Gig Worker
While freelancing is often depicted as a career journey born of necessity, three in 10 gig workers have started freelancing by choice. Fifty-nine percent make more money doing so, according to the Edelman Intelligence survey.
Also revealed by the Edelman Intelligence study was the fact that the gig economy isn’t just driven by Uber Drivers and Door Dash delivery personnel. Fifty percent of freelancers provide a professional service, such as computer programming or consulting.
But members of the gig economy do have one thing in common. Their needs when it comes to financial products and services align more closely to those of a business owner than a traditional worker or a consumer.
For one thing, gig workers must track income and business expenses in order to pay quarterly estimated taxes. To handle financial tasks like these, freelancers tend to turn to third-party solutions, such as cloud-based applications that provide anytime, anywhere access.
There is just one problem. While these solutions are slick and streamlined, there is little a freelancer can do when faced with complicated questions or the need to plan holistically for the financial future of their business.
As a result, many freelancers walk a thin line between personal and professional financial management. Sole proprietors are able to funnel freelance income through their individual tax return, so there is a tendency to utilize personal accounts for business expenses.
This constant interplay between business and commercial finances can leave gig workers prone to risk. For example, a marketing consultant who fails to notice a business charge on a personal credit card may neglect to deduct it as a business expense. That means the freelancer is paying higher taxes than are necessary.
On the other hand, a tendency to stringently report every legitimate business expenditure to reduce the current tax burden comes back to haunt gig workers later in life in the form of reduced Social Security benefits.
Since the operating model of most traditional financial institutions is based on relationship building and customer or member support, credit unions are distinctly positioned to own the freelance market, if they can get a few things right.
A Financial Institution for the Freelancer
According to Hussein Ahmed, founder and CEO of Challenger Bank Oxygen, some traditional financial institutions have failed to grow their lines of service to meet the needs of the gig worker. “That’s leaving the newest generation of workers and those who are self-employed short on options,” he said in a statement to PYMNTS.com.
The slower response from traditional credit unions to the needs of the gig worker is also opening a door of opportunity for challenger banks like Oxygen. In May 2020, Oxygen rolled out a new platform dedicated to the needs of gig workers. Accessed through a mobile app, it provides freelancers with a one stop shop for managing both business and personal finances, all through their smartphone.
Likewise, challenger Indi has created a banking solution aimed at freelancers. It’s – you guessed it – another app, and it offers many of the features freelancers crave, including the ability to track expenses and even save for taxes.
While challenger banks like Oxygen and Indi demonstrate an understanding for the gig worker’s way of life, platforms like these have still not evolved to meet the full range of products and services a freelancer needs from a financial institution.
Beyond the daily banking requirements of the freelancer are cash flow concerns, particularly as the COVID-19 pandemic reduces demand for services. According to the study conducted by the Edelman Institute, 44% of freelancers had realized a drop in income due to impacts of the pandemic.
Situations like these make access to credit important for the freelance worker, but traditional underwriting methods aren’t in sync with current working models, where infrequent paychecks don’t automatically translate to high risk.
Fortunately, with digital tools, traditional institutions are best equipped to serve the gig economy. Open APIs make it possible for credit unions to plug and play the full range of services that freelancers need to manage their financial outcomes. Since products hosted by APIs can connect to existing core data, it’s easy to provide access to both the personal and business side of the freelancer’s finances.
More importantly, as freelancers interact with digital products and services, the data they generate can be used for a variety of purposes, most importantly to fuel lending solutions that support freelancer growth.
Best of all, when a freelancer needs to walk through the complexities of their finances, there is always an informed advisor just a branch or phone call away.
As the gig economy continues to grow, credit unions are uniquely positioned to meet the needs of non-traditional workers by adopting the range of digital solutions necessary to keep both their institutions and the freelancer competitive.
Michael Abare is Senior Product Manager for Finastra in Austin, Texas.
Uber and Lyft drivers in Chicago now have the option of joining a local chapter of a national driver advocacy organization. Independent Drivers Guild (IDG) announced the launch of a branch in the city to advocate for “fair pay, benefits, gig worker rights and protections, including driver and delivery worker safety issues and an appeals process to fight unfair deactivations,” the organization said on Twitter Jan. 7.
IDG is affiliated with the Machinists Union and aims to advocate for benefits, rights and protections for drivers, according to the organization. Local Gig Workers Matter organizers who supported rideshare drivers amid the coronavirus pandemic and helped them to advocate for their rights in the state legislature will expand their role through IDG Chicago, the organization announced.
The expansion into Chicago will allow IDG to advocate for “tens of thousands” of drivers in addition to the more than 200,000 drivers across Connecticut, New Jersey and New York, the organization stated in the announcement. With a focus on “new 21st century organizing models, we can achieve tremendous changes for the drivers in Chicago and Illinois,” Executive Director of IDG Brendan Sexton said in a statement.
The gig economy is actually getting a boost amid the financial uncertainty of the coronavirus pandemic.
Since March, GigSmart saw a 460% increase in hourly gig postings even as some companies were forced to lay off workers, the mobile staffing app reported in November. An increase in contingent work will play a role in shaping people strategy in the near future, according to a Gartner report released in June. Employers will continue to expand their use of contingent workers to save money and maintain more flexibility, the firm reported.
Some gig workers such as rideshare drivers are seeking more protections and benefits amid the pandemic. Select states have enacted gig worker protections. In October, a state appeals court in California affirmed the lower court’s ruling that Uber and Lyft must reclassify drivers as employees.
In the past few years, rideshare drivers who turned to unions for advocacy have seen some progress. The Machinists Union helped New York drivers form the IDG, and the organization began representing Uber drivers in 2017. The same year, Uber rolled out the tipping option to its app in 121 cities; and New York City Taxi and Limousine Commission passed a proposed rule requiring ridesharing services to add a tipping option. In 2018, the city passed the first minimum wage rate for ride-share drivers, of $17.22 per hour, following a two-year worker-led campaign by IDG, according to the organization.
The incoming administration will likely support a union-friendly environment for workers. President-Elect Joe Biden’s platform “encourages and incentivizes unionization and collective bargaining.” Biden nominated Boston Mayor Marty Walsh as labor secretary Jan. 8. Walsh is the former president of Laborers’ Union Local 223 in Boston.
(Reuters) – Grocery delivery company Instacart said on Thursday it would pay $25 to its over half-a-million gig workers if they chose to take time off to get vaccinated against COVID-19.
The company, which has been lobbying government agencies for its delivery workers to get early access to vaccines, said eligible part-time employees such as in-store shoppers will also be offered the stipend starting February 1.
Gig workers are independent contractors who perform on-demand services, including delivering groceries. Instacart is not mandating its workers to get vaccinated.
According to the U.S. Centers for Disease Control and Prevention, people over 75 and essential workers are scheduled to receive the vaccine in a later phase, after healthcare workers and nursing home residents.
Dollar General Corp said on Wednesday it will offer frontline employees four hours worth of pay after they get the vaccine, while Walmart Inc has agreements with U.S. states to administer the vaccine to its employees should they choose to receive it once they are eligible.
Instacart’s gig economy based workforce, who are not given health insurance and offered limited sick pay, has grown 150% over the last year as its business boomed from people turning more to online shopping during the health crisis.
Reuters reported in November that Instacart had picked Goldman Sachs to lead preparations for its IPO, which could come this year and value it at around $30 billion.
(Reporting by Uday Sampath in Bengaluru; Editing by Krishna Chandra Eluri)