KUALA LUMPUR: The Employees Provident Fund (EPF) will be accepting applications for a special RM10,000 withdrawal from April 1 to April 30 this year.
The application is open to members below age 55 and allows for members to withdraw a maximum of RM10,000 and a minimum of RM50.
“Members must fully utilise their savings balance in Account 2 before accessing Account 1,” the fund said in a statement which also revealed that payment would start from April 20 onwards.
This is following the special announcement made by Prime Minister Datuk Seri Ismail Sabri Yaakob recently who said this RM10,000 EPF withdrawal is to ease the burden of Malaysians still affected by the COVID-19 pandemic.
The government previously allowed three EPF withdrawals – i-Lestari, i-Sinar, and i-Citra – where more than RM101 billion was dispersed to 7.34 million contributors since the pandemic started two years ago.
Opposition to the withdrawal
The Malaysian Employers Foundation (MEF) believes that this round of EPF withdrawals should be based on special needs.
MEF President Datuk Dr Syed Hussain Syed Husman said that the foundation hopes EPF would detail criteria or special circumstances that would allow for the approval of this special withdrawals.
“We at MEF are concerned that the EPF withdrawals previously made by members have put them at risk of falling into old-age poverty,” he said.
As of date, about 48% of EPF contributors ages 55 and below do not have adequate savings for retirement.
“Replenishing the EPF savings would mean members need to work extra four to six years to cover back the amount previously withdrawn. It is unlikely that the retirement age will be raised and it would only mean these employees would not have enough savings for retirement,” he added.
Syed Hussain also calls for the government to be responsible in ensuring EPF members are able to live normally after retirement.
“It is clear we need far-reaching solutions covering an effective social safety net programme, robust labour maket policies, sustainable economic growth, reskilling and upskilling of the labour force, and policies that encourages automation and digitalisation to help increase productivity for economic recovery. This would in turn also help employees get higher income that increases their EPF contributions,” he said.
Researchers weigh in
Research firm CGS CIMB said that the decision for this EPF withdrawals would impact the country’s fund flows. They explained that it may cause higher net selling from local institutional funds because of the requirement for EPF to raise liquidity for possible member withdrawals.
However, the firm said that this special EPF withdrawal scheme would boost consumer spending power especially over the upcoming Aidilfitri celebrations soon.
“Potential beneficiaries are the consumers, travel and healthcare sectors as they would benefit from higher domestic consumer spending ahead of the festivities and reopening of international borders,” they added.
Meanwhile, AmInvestment Bank said that this EPF withdrawal would be positive for spurring demand of consumer goods that would support near term consumer spending.
But, the research firm said that the impact is likely softer compared to previous EPF withdrawals because of the recovering economy. They believe that the number of struggling contributors may have been reduced while it is likely that contributors might avoid further unnecessary withdrawals.
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