SEVERAL Opposition leaders decried the Government’s decision to expand withdrawals by Employees Provident Fund (EPF) from the initial two million contributors to eight million.
“This is utterly irresponsible. It will only put massive pressure on EPF and affect dividend payouts to its contributors,” PKR MP Wong Chen told FocusM.
Initially, Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz announced that the Government would allow Account 1 withdrawals, under the i-Sinar programme, for the B40 and M40 groups.
The plan would allow about two million depositors to withdraw up to RM7,000 from Account 1, which would cost about RM14 bil.
However, several leaders from the coalition Government itself, particularly Umno, was displeased by the original plan and pressured the finance minister to expand the programme.
Tengku Zafrul eventually relented and expanded the scheme for all who had suffered job losses and reduced income, with a maximum threshold of RM10,000.
The latest plan may cost EPF up to RM70 bil for next year.
Wong Chen said the massive amount of withdrawal was worrying as it would put EPF under severe financial pressure in the years to come.
In making his argument, the Subang MP said that last year, contributors deposited RM76 bil into EPF. Contributors also withdrew RM45 bil in the same year.
“For 2021, my projection is that contributions will be lesser, due to the rise in unemployment and pay cuts. So, I estimate the EPF contribution to fall to RM70 bil.
“And there will also be more withdrawals, which in my estimate will be higher at RM50 bil,” said Wong Chen.
Unwise to sell assets during economic downturn
He added that as a result, the total net inflow for EPF will be RM70 bil (deposits) minus RM50 bil (withdrawals), which will be RM20 bil.
“Thus, EPF will need to raise additional funds of RM50 bil {RM70 billion (COVID-19 withdrawals) minus RM20 billion (net inflow)}.
“And the federal deficit is expected to be at RM85 bil next year. To raise money for the deficit, the Government will have to issue RM85 bil of sukuks and bonds.
“Normally, EPF will buy 25% of the sukuks and bonds. Therefore, EPF will need to find an additional RM21 bil to do so,” said the Parliamentary Select Committee for Trade and Investments chairman.
In total, Wong Chen said, EPF would need to fork out an additional RM71 bil, which means the latter would need to dispose some of ts assets and shares to get the money.
“And is it wise to sell assets and blue chip shares when the market is depressed? Will the asset sales be done via open tenders or are there crony vultures circling to make killings?” he asked.
The lawmaker then urged Tengku Zafrul to stop making populist decisions just for the sake of pleasing Umno.
“Be responsible and stick to the original plan. This latest move will only affect EPF’s sustainability in dishing out dividends to its contributors,” said Wong Chen.
Borrow from Socso, shelve unnecessary projects
Sharing the PKR leader’s concerns, Parti Sosialis Malaysia PSM said the decision will affect the low-income earners’ savings for their retirement.
“The Government should have limited the withdrawal. Allow the RM10,000 withdrawal for those who have RM100,000 and above in their Account 1.
“We should not allow those who have less than RM50,000 to make withdrawals from Account 1,” its secretary-general A Sivarajan told FocusM.
However, he admitted that it was a tough situation for the Government as it had to juggle between managing an economic downturn and keeping people safe; both in terms of health and finances.
Offering a solution, Sivarajan urged EPF to borrow money from the Social Security Organisation (Socso) instead of selling of its assets and shares.
“Why not consider taking a loan from the cash-rich Socso? Workers won’t mind as they are contributing there too,” he said.
Sivarajan added that EPF should also cancel some of its projects in order to save funds.
“Maybe they should withdraw for the questionable UK Battersea project and shelve plans to build a new building in Sungai Buloh,” he said. – Nov 28, 2020.
