Withdrawals risk contributors’ financial security, say experts
PETALING JAYA: The government is being responsible in refusing calls for another round of special withdrawal of the Employees Provident Fund (EPF), say economists.
Among the reasons cited was the fact that there is a large number of contributors with less than RM10,000 in their accounts after the Covid-19 pandemic.
Just last week, it was reported that 6.3 million members – or 48% of contributors – had less than RM10,000 in savings.
As such, there is no justification for another round of EPF withdrawal and the money should stay in there to provide financial security for contributors, said Socio-Economic Research Centre (SERC) executive director Lee Heng Guie.
“It would be irresponsible for the government or EPF to allow people to take out their money now. The previous withdrawals were to allow contributors to meet cash flow problems due to the Covid-19 pandemic.
“There were three rounds of withdrawals then but the pandemic is now over,” he said.
Lee said the third EPF account or “flexible” account, which is expected to be implemented in April next year – will provide contributors the chance to overcome short-term cash flow problems in the event of another disaster.
“Granted, there are still people who are facing problems in handling the rising cost of living but this is no reason to draw down on retirement savings.
“EPF is not your normal savings account. It is meant for your future,” he said.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid agreed.
“It is to ensure that members have adequate savings when they retire.”
These withdrawals, he said, would lead to contributors not having enough when they retire.
ALSO READ: A juggling act for EPF savings
Mohd Afzanizam said the government can look into other avenues or existing policies.
“The aid can come from zakat for Muslims and the Welfare Department or any other avenues involving various government agencies,” he said.
According to figures from April 2020 before Covid-19 hit, only 4.7 million members – or 37% – had less than RM10,000.
The Finance Ministry, in a parliamentary reply on Nov 23, said any new additional pre-retirement withdrawals would worsen the issue of insufficient retirement savings, which is already at an alarming level.
“With less than RM10,000, members will only have retirement income of less than RM42 per month for a period of 20 years,” it said.
The ministry added that the economy was no longer in a recovery phase and that gross domestic product has surpassed pre-pandemic levels.
The number of EPF members has also risen to its highest level in history, namely 15.99 million as of September 2023, up from 15.61 million in September last year, an increase of 380,000.