EPF’s special withdrawal a lifeline for many

PETALING JAYA: When the government recently approved the Employee Provident Fund (EPF) Special Withdrawal, Shasha was among those who breathed a sigh of relief.

The 41-year-old lost her job two years ago, and has been struggling to make ends meet since.

“It is very difficult to find a job because of my age. I have been doing so many odd jobs to keep afloat, and I need capital to start a business.

“Of course, I am also afraid that what I have left in my EPF will not be enough when I reach retirement age, or if I need money for medical reasons,” Shasha said.

Shasha’s concern was shared by many, including Prime Minister Datuk Seri Ismail Sabri Yaakob, who pleaded with all contributors to maintain their savings unless they are truly desperate.

In order to address the concern, EPF in its guidelines for the Special Withdrawal noted that those who wished to withdraw their savings will have 100% of their latest monthly EPF contribution credited into Account 1, as opposed to the current 70:30 split between Account 1 and Account 2.

Those who take money out under the Special Withdrawal scheme are also required to contribute 20% more on top of the total amount withdrawn when they replenish their EPF savings.

Once the entire amount (principal plus 20%) has been restored to the account, then the 70:30 contribution ratio will resume.

Meanwhile, social activist, Suraya Ali, 39, who had to withdraw from her EPF to pay for her car repairs, said she welcomed EPF’s move to impose the extra 20% top up for contributors.

“I am happier in fact (that an additional 20% of her contribution will be kept in Account 1) because at least I have savings when I retire.

“Some are choosing to withdraw because they are saying that if they die early, they might not have the chance to use their hard-earned money.

“But for me, that money is not just for me, it is also for my children when I’m gone,” said the mother of two.

Suraya also has plans to add more money into her EPF fund when she’s more financially stable.

Iylia Zuleikha Iskandar, 31, an insurance agent who also had no choice but to withdraw her savings, said her priority as of now is to have extra money in case of an emergency.

“I am not too concerned about the 20% reimbursement, or the fact that all of the contribution will go to Account 1 for a few years.

“My husband has just started a new job, and our income is not that stable, so at least we have money in case we need to pay for anything,” she said.

In the FAQ section on its website, EPF said the rationale behind the additional contribution is to replace the amount taken, and to ensure that Shasha and many others like her, would at least have savings after retirement.

“The additional 20% is set based on the estimated loss or loss of dividend (opportunity loss) on the total withdrawal, with an average of 5% annual dividend for replacement which is expected to take up to four years, subject to the member’s amount of contribution and consistency in contributing.

“This is to ensure that savings can be replaced quickly and to capitalise on dividend multiples, in addition to balancing between current urgent needs and future savings,” it said.