EMPLOYEES Provident Fund (EPF) members who are genuinely saving for old age can heave a sigh of relief for Prime Minister-cum-Finance Minister Datuk Seri Anwar Ibrahim is adamant that there would be no more future rounds of special withdrawal despite incessant calls by the opposition and certain quarters for the unity government to be more accommodative to the plight of B40 and M40 groups who face cash flow impediments.
“The government will not consider any new additional withdrawal of EPF savings because special withdrawals in the past were intended as measures to contain the impact of COVID-19,” insisted the Finance Ministry in a statement.
“In fact, according to the OECD (Organisation for Economic Co-operation and Development), all countries that have allowed contributors to withdraw part of their retirement funds during the pandemic have stopped the early withdrawal facility from retirement funds since 2021.”
In order to make room for members who have (adequate) EPF savings but are desperate to secure cash resources without having to make withdrawals from their EPF savings, the Government is currently finalising the Second Account Support Facility Initiative Programme.
This will enable EPF members to enjoy the convenience of using the savings balance in their Second Account as a collateral to seek financing from banking institutions to tide through difficult times.
“This initiative will not burden the people because the interest rate (conventional) or profit rate (Islamic) that will be charged by the banking institutions involved in this initiative is expected to be between 4% and 5% per annum,” justified the Finance Ministry.
“This rate is much lower than the current market rate of personal financing from banking institutions which is charged at around 8% to 15%.”
Above all else, this initiative also does not conflict with Section 51 of the EPF Act 1991 because the savings balance in Account 2 is only used as a collateral for withdrawal at retirement age.
“This is in line with the EPF’s investment objective as a long-term retirement fund to protect and increase the value of members’ savings through the declaration of a stable and sustainable dividend rate,” the Finance Ministry pointed out. “Detailed information about this initiative will be announced by the EPF later.”
Recall that the level of savings among EPF members has dwindled substantially after the implementation of four withdrawal facilities which saw RM145 bil withdrawn by members at the height of the COVID-19 pandemic.
The four notable withdrawal programmes are i-Lestari, i-Sinar, i-Citra as well as the special one-off withdrawal of RM10,000.
Sadly, as of June 30 last year, a total of 6.62 million EPF members or 52% of the total of 12.78 million EPF members aged under 55 had savings of less than RM10,000. Of that number, 4.99 million members or 75% were Bumiputera members. – March 21, 2023