THE Employees Provident Fund (EPF) has yet to decide on allowing Account 1 withdrawals by contributors and is still in talks with the Finance Ministry on the issue.
In a report by Malay daily Harian Metro, its chief executive officer Tunku Alizakri Alias said his organisation would not be reckless on the matter, adding it was focused on protecting the people’s retirement savings.
“I understand many are upset and worried due to the economic hardship caused by COVID-19. These are unprecedented times.
“I am probably the most hated person in Malaysia for making unpopular decisions but my job is to safeguard people’s retirement savings,” he was reported saying.
Under Budget 2021, Finance Minister Tengku Zafrul announced that the Government would allow Account 1 withdrawals for those who are economically affected due to the pandemic.
The proposal would allow a maximum of RM500 monthly withdrawal for the next six months. The maximum that can be withdrawn is RM6,000.
However, many have panned the idea saying that a lot of Malaysians, especially the B40, have little savings in EPF.
Senior fellow and director of the Economic Studies Programme at the Jeffrey Cheah Institute on Southeast Asia at Sunway University, Yeah Kim Leng suggested that the Government offer interest free loans and increase direct cash aid instead of allowing Account 1 withdrawal.
Three days ago, Tengku Zafrul himself had admitted that 32% of EPF contributors have less than RM5,000 in their Account 1, with another 10% only having between RM5,000 and RM10,000.
Alizakri said that his team would not back down from their commitment to safeguard EPF funds, despite pressure from politicians.
He also noted that EPF would look into Tengku Zafrul’s proposal holistically, to find a balance between solving today’s problems and ensuring future sustainability.
Alizakri added that statistics shows that 54%, or 137,000 of its 245,000 members aged 54-years-old in 2020, have less than RM50,000 in their savings and would live a retirement life with an income of only RM200 per month, spread over 20 years.
“RM200 is far below the country’s poverty threshold of RM2,208 for one household and RM2,450 for the basic expenses of a senior citizen as stated in a survey by the Centre for Social Welfare Research (SWRC),” he observed.
On the cause, Alizakri pointed at low-base salary among contributors as the problem.
“In the past, many contributors had low-base salaries, where the rest was in the form of allowances. However, the situation had improved due the implementation of minimum wage,” he remarked. – Nov 12, 2020
