THE government’s proposal to introduce a flexible account known as Account 3, allowing Employees’ Provident Fund (EPF) members to withdraw a portion of their monthly contributions has sparked controversy and received pushback.
The Social Protection Contributors Advisory Association Malaysia (SPCAAM) has criticised the plan, labelling it as “irresponsible” due to its potential negative impact on EPF members’ retirement savings.
According to SPCAAM’s international labor adviser Callistus Antony D’Angelus, those utilising the flexible account would likely be individuals most in need of savings during retirement.
“The EPF’s actions are not only irresponsible towards contributors but also towards the economy.
“What would happen to individuals who retire and have inadequate savings to tide themselves over during their retirement?
“The burden will ultimately fall on the state in many ways, shapes and forms. The EPF should consider the socioeconomic implications of such a policy decision,” he said.
Moreover, the proposed Account 3, which would allow for withdrawals of 10% of EPF members’ future contributions at any time aims to assist cash-strapped contributors before retirement age.
However, critics argue that this move resembles previous government decisions during the COVID-19 pandemic to allow EPF withdrawals, which were also met with criticism.
Currently, EPF members’ contributions are allocated into Account 1 (70%) and Account 2 (30%). While Account 1 can only be accessed after retirement, Account 2 can be utilised before retirement for specific purposes such as education and housing expenses.
Moreover, D’Angelus suggested that instead of implementing Account 3, the government should focus on improving the minimum wage, currently set at RM1,500 per month.
The government has yet to address the concerns raised by SPCAAM and other critics regarding the potential consequences of introducing the EPF flexible account. – April 17, 2024
Main photo credit: Reuters
