Account 1 withdrawals not a good idea!

THERE have been strong but mixed feelings about the Government’s decision to allow people to withdraw from their own Employees Provident Fund (EPF) Account 1.

On one hand, some are agreeable with the gesture as it allows them to settle any outstanding repayments that they may have accumulated post-moratorium. On the other, some are outraged by the decision and believe that it’s a bad idea for the long run.

This is mainly because the EPF is the sole mandatory retirement saving for those in the private sector, especially those in the medium and lower ranks with limited funds.

Therefore, it is best if the funds are left alone until retirement as the EPF pay good dividends and it has many schemes to release these funds periodically in the best interest of the contributors’ upkeep in in the future.

Instead, the Government should introduce a scheme that is similar to the National Higher Education Fund (PTPTN) to provide loans at minimum interest and are only repayable when the borrowers’ economic situation improves.

A concerned Malaysian citizen, who wishes to remain unnamed, commented in a news portal: “If the Government continues to allow the people to withdraw from their EPF, it is believed that they will not be able to recover the amount for later use when they really need it.

“The Perikatan Nasional government is having a bloated budget to fatten their own pockets and has no intention of helping the rakyat in need.”

Another Malaysian citizen said: “It is very clear that some politicians are not worried about the future of the people.

“If the Government cannot even help these people with some money now, how are they going to help these poor people when they are too old to work and face a similar situation as now. Will the politicians then withdraw their own EPF savings and help those who may be suffering?”

Resonating the sentiment, Malaysian Trade Union Congress (MTUC) Sarawak secretary Andrew Lo said that the Government, MPs and policymakers should be ashamed of themselves for implementing this method.

“We all should be embarrassed that in 2020, the year that we are supposed to be in a fully developed nation, workers are so desperate that they have to resort to dig into their retirement savings to survive,” he said.

A worry that never goes away

The concern regarding retirement funds is not a new topic. In 2017, a joint study by Visa and Credit Counselling and Debt Management Agency revealed that over 50% of Malaysian were not financially ready for retirement.

Ironically, back then, even EPF expressed concern with the spending habits of its contributors after finding that so many of them tend to deplete their savings within three to five years of retirement.

At the moment, with the current financial climate and uncertain environment, the only real advice that people should heed close to heart is to just be more prudent with the expenditure during retirement, considering it’s a period where income would be much lower. – Dec 12, 2020

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