PETALING JAYA: The insolvency department is calling for the 60% cap for the deduction of civil servants’ salaries to be reviewed in order to reduce their debt and lessen the risk of bankruptcy.
The department’s director-general M Bakri Majid said the limit should be set at 55% instead, which would allow civil servants to have a take home salary of 45%, Berita Harian reported.
AdvertisementCurrently, civil servants must ensure that their net salary after deductions is no less than 40% of their monthly salary.
According to Bakri, the current percentage does not take into account other expenses incurred by the civil servants, such as repayments for Amanah Saham Bumiputera (ASB) and National Higher Education Fund Corporation (PTPTN) loans, as well as their contribution to Lembaga Tabung Haji savings.
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Bakri was responding to reports on the increasing rate of bankruptcy cases among civil servants.
AdvertisementThe percentage of civil servants who were declared bankrupt rose to 14.5% last year, up from 10.3% in 2021.
Bakri said a study by the department revealed that 50% of civil servants who were declared bankrupt had defaulted on their personal loans.
AdvertisementBy reducing the cap, civil servants will not only be provided with more “breathing space”, but would also lower the risk of them taking unnecessary loans, he said.
It would also help alleviate the financial constraints caused by debts and strengthen their finances.
“Failure to address the issue of civil servants’ debts could affect their financial stability and quality of life, and undermine efforts by the government to strengthen governance.”