Covid-19: Mixed reactions over EPF withdrawal scheme

JOHOR BARU: The government’s decision to allow Employees Provident Fund (EPF) contributors to apply for the RM500 monthly withdrawal from their Account 2 during the Covid-19 crisis has received various reactions from people.

While some applauded the move, others expressed concerns over its effect in the long run, especially for those with small EPF savings.

Social activist James Ho, 67, said that the government's move was good as it could ease the financial burden of the people for the short run during the movement control order (MCO) period.

“I think it is a good move for a lot of people, especially the low-income group who are facing tough times during the MCO period and are unable to get a steady income.

“However, in the long run, it may have a negative impact, which is why it is good that they can only take out the money for a certain time period, ” he said.

Legal advisor Muhammad Nur Sadiqin Mohd Khusni, 25, welcomed the move.

“I think it is a good way for the government to ease the burden of those facing financial difficulty as they are given the freedom to choose what is best for their financial health.

“On top of that, limiting it to RM500 monthly is also a good way to avoid account holders from overspending their savings, ” he added.

However, entrepreneur Fanny Wong, 39, said that the initiative would bring more harm than good in the long run as some people may not have enough in their savings to support themselves when they retire.

“I think it is better for the government to give financial aid to the low-income group instead of allowing them to take out money from their own savings.

“Some may not even have much in their savings and it is risky for them to take the money out now as they may not have enough in the future, ” she said.

She added that although RM500 seemed like a small amount of money, cumulatively, it would end up as a large sum of income lost.

“I still have savings in my EPF account from the time when I was working with a company and I have decided that I will not take it out, ” she said.

Factory operator S. Krishnan, 32, said that it was a good decision as it allowed the people to be financially independent during the trying times.

“I will not take the money out but it is good to know that I can if I choose to do so.

“I think it is a good move as this could stop those struggling for money from turning to loan sharks or being involved in criminal activities during desperate times, ” he said.

However, he said it was important for EPF members to be careful about the way they spend the money and they should not take it out unless it is absolutely necessary.

Meanwhile, human resource executive Muhammad Aizat Amir, 25, said that the move might not be effective to assist everyone with an EPF account.

“For those who have worked for many years, they may have enough to give them some form of a financial cushion.

“However, for someone like me, who has only worked for one or two years, the amount of savings in the EPF Account 2 is still very low and it is risky to take it out, ” he said, adding that he would not withdraw his savings from the account.

EPF members can apply for a RM500 monthly withdrawal to boost private consumption during the Covid-19 pandemic through the i-Lestari Account 2 withdrawal scheme beginning April 1.

EPF chief executive officer Tunku Alizakri Alias said the decision to allow withdrawals from the retirement fund was considered carefully after weighing the well-being of its millions of members and safeguarding their savings.

EPF stated that economists had agreed that the measure announced by Prime Minister Tan Sri Muhyiddin Yassin on March 23 to allow EPF members to withdraw up to RM500 each month for a year will help boost private consumption, thus cushioning the impact of the pandemic on the Malaysian economy.

Muhyiddin said the withdrawal scheme during the economic downturn caused by the Covid-19 pandemic is expected to benefit more than 12 million EPF members, with a total withdrawal potential of about RM40bil.