Only if it’s a matter of life or death

Financial planners warn that more EPF withdrawals may worsen the situation

PETALING JAYA: Retirement funds should be left untouched unless there is a pressing need, say financial planners as calls surface for another round of Employees Provident Fund (EPF) withdrawals.

Fund manager Danny Wong said people risk depleting their retirement funds if this money is used for non-serious matters.

“My advice is not to touch these funds unless it is a life-or-death situation.

“This (the withdrawals) will burden the next generation if there is not enough money for retirement – especially those in the middle- to low-income group, where children will become the ‘sandwich class’,” said the chief executive officer of Areca Capital Sdn Bhd.

The “sandwich class” refers to those who are not poor enough to qualify for welfare schemes, but are not rich enough to afford non-subsidised housing.

Wong said people should instead cultivate the habit of setting aside funds for investment and retirement first, before spending on other things.

He suggested taking up a side gig, investing, or upskilling to secure a better salary as some of the ways to grow one’s income.

Malaysia Literacy in Financial Education Association founding chairman Amy Seok said another round of EPF withdrawals would not bode well for retirement savings, adding that the government should instead find ways to help people replenish their savings.

“Of course, for those who have cashflow issues, the EPF withdrawal will temporarily ease their burden,” she acknowledged.

However, Seok warned that heavy dependence on premature EPF withdrawals would leave these people high and dry by the time they retire.

Citing an example of problems that may ensue as a result of depleted savings, she said those who do not have medical reserve funds may be affected as public healthcare would end up being their only resort.

She also said it was important for people to evaluate potential risks and needs that could arise in the future, adding financial literacy and education are also important.

Even some EPF contributors agree that premature withdrawals should be discouraged.

K. Jeevan, 50, said he would not opt for another round of withdrawals, preferring to make do with his disposable income and savings.

“While it is tempting to withdraw, we have to think about our future. I only have 10 years before I retire, so I need to save as much as I can.

“Still, I don’t think it will be enough,” said the technician from Penang who makes it a point to save at least 5% of his pay for emergencies.

Jeevan said he withdrew some funds when the i-Sinar facility was made available in the early days of the Covid-19 pandemic, as he was facing cashflow problems. However, he is determined not to withdraw any more.

Shahril Rahman, 33, from Ampang, Selangor, said he is still undecided on whether to opt for another withdrawal.“Speaking from a middle-income perspective, people are facing constant overnight policy rate hikes and rising costs of living,” he said.

The public relations officer said he has also been diversifying his long-term investments for the future.

“Even if that is done, having enough is very subjective,” he said, adding that he will not be relying solely on his EPF funds, and is prepared to work even after he reaches the retirement age.

Jenny, 45, from Petaling Jaya, Selangor, said early EPF withdrawals should be allowed as there are those who are genuinely desperate.

“Situations change and society shouldn’t be quick to judge those who unfreeze their EPF to make ends meet,” she said.

However, the business development manager said she would not opt for another withdrawal but would instead cut back on expenses.Office manager M. Malar Dasan said although he is not keen on further withdrawals, he may just exercise the option if “it is given”.

“If you ask me, I might just make the withdrawal and keep it for emergencies,” he added.

On Jan 16, Prime Minister Datuk Seri Anwar Ibrahim said the government will have to consider the plight of EPF contributors before they are allowed another round of special withdrawals as many have little savings left for their future.

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