THE Covid-19 pandemic has caused tremendous damage to lives, livelihoods and also the economy, which is now on the mend with the prospect of a return to some semblance of normalcy around the corner with the imminent arrival of vaccines against the virus.
But before any of that can happen, there is an urgent need to shore up finances of the public, following various cash aids that were given out at the onset of the crisis.
With the government, through its various agencies, shouldering as much financial and health strain in dousing the debilitating effects of the pandemic, there is still a need to smoothen the liquidity needs of Malaysians as the country recovers from the pandemic and its economic effects.
Following on Budget 2021, one of the more contentious proposals was the relaxation for people to dip into their retirement funds to ease the cash requirements of today.
There was much help during the early days of the pandemic to shore up finances and employment, but more is needed as the economy is in recession, but starting to show improvements that are projected to see GDP grow by as much as 7.5% next year.
The Employees Provident Fund (EPF) is the store of many of the people’s savings and has come into focus in providing short-term liquidity to members while balancing the primary need to make sure members have enough money for their retirement.
The EPF addresses issues and questions on the latest i-Sinar programme announced by the government and some of the lingering questions Malaysians have over the process of withdrawing urgently needed cash while wondering over the future of their retirement savings.
Q: How did EPF come up with the i-Sinar mechanism and criteria?A: i-Sinar was formulated after extensive deliberation and consultation with key stakeholders from the public and private sectors, including the Ministry of Finance. The criteria and mechanism were determined with due consideration to balance members’ needs today as well as the EPF’s mandate to safeguard their retirement.
Q: Members are disappointed with the conditions in place which were labelled troublesome and difficult. Comments?
A: There are no conditions for i-Sinar application. What is outlined are the criteria to ensure that the application matches the EPF’s internal data which will easily and securely expedite the approval process.
The process of verification is required to avoid fraud and improper withdrawal of i-Sinar funds by third parties.
For members who fulfil the criteria, their application will be approved automatically.
Only confirmation of the maximum amount is required during a member’s online application, and is not difficult.
Applications start from Dec 21,2020.
Category 1 is for members who have no contribution for two (2) consecutive months upon application, and the EPF’s internal data is used to verify this. Therefore, no supporting documents are required during application.
Category 2 is for members experiencing a reduction of income, and there is no way for the EPF to confirm this without supporting documents. The EPF can only detect a reduction in basic salary (through contributions) but cannot detect a reduction in allowances, overtime pay, etc.
As each member’s situation is unique, Category 2 provides the opportunity for the EPF to consider these situations based on their supporting documents. Members just need to apply online.
Q: Is a blanket/auto approval for those who also applied for i-Lestari not possible? Why?
A: The situation when the EPF launched i-Lestari and i-Sinar is very different, the country was in a different situation then compared to now. Economic activity basically halted during those months (starting in March). Now, the economy is almost back to normal and most employees are back to work.
Even so, the EPF understands that the economic situation is different for current members depending on the sector or industry they are working in, and i-Sinar will be available to assist them.
Q: Some members did not suffer a 30% reduction in income, but they need cash to sustain their livelihood in this pandemic, especially those in the B40/M40 category. Also, for those whose income is less than they got previously. Can they be considered?
A: There is still latitude under Category 2 to consider applications from all members who are affected by Covid-19. If you have suffered a reduction in income or salary, and have the supporting documents to show for it, you are encouraged to apply on Jan 11,2021. The EPF will still consider your application.
This is to ensure that the door is not closed and provides an opportunity for as many members as possible to apply for i-Sinar, estimated to be eight million people.
Q: Why was the six-month staggered payment set as the payment mechanism when members need their money fast? Why can’t it be one-off?
A: EPF wishes to ensure members are assisted for as long as possible and understands that the first month is important for members to cover their liabilities and beginning of the year expenses such as children’s schooling and the like.
As such, the staggered approach in payment is based on a few criteria:
– Data on current liabilities of EPF members;
– The need to spread out the period of assistance due to the uncertainty of the Covid-19 pandemic; and
– To balance the cashflow and current investments of the EPF.
As a reminder, the first payment will be up to RM5,000 (for those with Account 1 balance of RM100,000 and below) as we understand that more expenses are needed at the beginning of the year for school fees, etc.
It must be remembered that i-Sinar needs to be looked at in a holistic context given the assistance under the Prihatin, Penjana and Kita Prihatin stimulus packages which are intended to reduce the burden of cashflow and liabilities of individuals and households.
For example, payment for Bantuan Prihatin Nasional 2.0 (second phase) will be given in January 2021 and bank lending assistance such as moratorium and reduced instalments are also available to benefit members.
Q: Can the processing time be cut short as members are desperate? Is there an online application to reduce people going to branches?
A: For those in Category 1, the EPF has expedited the application process via auto-approval using internal data. They are estimated to receive their first payment in mid-January 2021.
For those in Category 2, the EPF estimates the processing time to be between two and three weeks from date of application, to allow document verification and case-by-case consideration. They are estimated to receive their first payment by the end of February.
Members are required to apply online.
Before applying, members must do the following:
1. Ensure their i-Akaun is active;
2. Ensure their phone number is updated to receive TAC number (at EPF counter or kiosk);
3. Ensure their bank account number is active.
Q: What is the replenishment method for i-Sinar?A: For members under i-Sinar, all future contributions will be channelled to Account 1 until the amount taken out is replenished. Once the amount taken out is replenished, contributions will revert to the original ratio of 70:30 in Account 1 and Account 2.
Q: Can action be taken against employers who refuse to cooperate and facilitate their employee’s i-Sinar application?
A: The EPF will ensure that action is taken against non-cooperative employers, to ensure that members’ i-Sinar applications are smooth.
Impact to members’ retirement + investments
Q: What is the impact of i-Sinar on EPF’s financial health?
A: Guided by our Strategic Asset Allocation (SAA), our investments have proven to be resilient so far despite the unique challenges that the market faced during the economic slowdown.
The EPF has always been diversifying its investments across domestic and global markets, with the consideration of its need to have sufficient cash flow at all times, and this includes extreme times like the pandemic. Fundamentally, the EPF is a long-term investor and every investment decision made will continue to take into account its responsibility to sustain members’ funds even in unprecedented situations like this pandemic.
At the moment and guided by i-Sinar’s existing structure, all of the EPF’s actions will ensure there is no impact to the domestic market.
Q: What is the impact of i-Sinar to members’ future retirement? What is EPF’s advice to them?
A: While the EPF understands the need for members to withdraw from their savings to survive these difficult times, we hope members can plan beforehand on how much is needed so that they can fulfil today’s needs while minimising the impact on their future retirement.
The EPF encourages members to seek our Retirement Advisory Services (RAS) officers for assistance in guiding their finances and rebuilding their nest egg for retirement.
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