Beginning April 1, all Employees Provident Fund (EPF) contributors below the age of 55 can withdraw a maximum of RM500 a month for a period of 12 months from their second account.
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Prime Minister Tan Sri Muhyiddin Yassin said the i-Lestari withdrawal facility for all EPF contributors is one of the initiatives agreed to by the Economic Action Council to lessen the burden of the people during the Covid-19 pandemic.
“This initiative, with an estimated withdrawal of RM40 billion, is expected to benefit 12 million EPF contributors in the country.
“Apart from the reduction in the contribution rate by four percent announced previously, I hope this initiative can provide additional monies for employees for them to buy daily necessities.
“I would like to advise all people who will benefit from this initiative to use the additional monies wisely. Buy items that are necessary during these difficult times.
“What is important is to ensure there is food on the table for your family. Perhaps, the additional money can also be used to settle water or electricity bills and even house rentals depending on your needs,” said Muhyiddin today.
Datuk Seri Anwar Ibrahim has urged Putrajaya today to reach deep into the country’s coffers to help those who are financially incapacitated due to the Covid-19 pandemic’s effects on the economy.
In a live video address on his Facebook page, the PKR president said the federal government can utilise the nation’s reserves or increase contribution from state oil and gas Petroliam Nasional Bhd (Petronas) rather than Employees’ Provident Fund (EPF) savings.
“Use the huge reserves that we already have. Whether the government’s or Petronas’, in order to save the people in the current situation,” Anwar said.
The Port Dickson MP also lamented that allowing the public to withdraw their savings now as allowed by Putrajaya today would affect their future.
“This is savings for their future. Among the rich and those who earn highly, it is not that worrying. Those who earn less, this to me, may affect their future,” Anwar said.
“There are 12 million EPF contributors, and if taken into account the government’s projection, it would increase to RM6 billion a year if everyone takes out their savings.
“I don’t feel everyone would be taking their savings out, but I feel the government must reconsider. Do not burden them,” he added.
Anwar then proposed that the government give at the minimum, a partial contribution of RM250 and allow contributors to take out RM250 from their EPF accounts, if needed.
Earlier, Pakatan Harapan (PH) had suggested for Putrajaya to instead disburse additional aid of RM1,000 twice in March and April to recipients of the Bantuan Sara Hidup (BSH) financial aid.
Amid the Covid-19 pandemic, PH said such a move would cost Putrajaya RM8.2 billion, but would be the speediest approach to help those who are most affected by the movement control order (MCO) rather than withdrawing from the Employees’ Provident Fund (EPF).
Meanwhile, the Malaysian Trades Union Congress (MTUC) has urged the government to use its reserve funds to provide interest-free loans, rather than permit workers to make withdrawals from their EPF accounts.
Its secretary-general J Solomon said the loans, which should be kept to at least RM5,000 per person, will help workers to sustain themselves and their families during the ongoing Covid-19 pandemic.
“They should be allowed to start repaying through salary deductions once the situation returns to normal. The government should have the moral courage to dig into its reserves to pump this money directly into the pockets of workers without having to compromise their old age savings,” he said in a statement.
Adding that the EPF announcement by Prime Minister Tan Sri Muhyidin Yassin was “shocking”, Solomon said if workers were to withdraw money from their EPF savings, it would result in the loss of annual and compounded dividends in the long term
“The government, whether it realises it or not, is actually trying to make itself look good by allowing this. In other words, it is using the workers’ savings to pump in RM50 billion for the next nine months.
“This is not a morally right thing to do. It is a case of having to ‘rob’ from one’s own savings, arising from the failure of the government to protect its people,” he said.
Noting that most EPF contributors already use their second account to reduce their housing loan repayment to save on their interest, or depend on this account for their tertiary education and medical needs, Solomon added many have already opted to reduce their monthly contributions by 4 percent which will have an adverse effect on their savings.
“We wish to remind the government that the current situation requires ingenuity from our economic planners to ease the burden of all the workers in the country. But to ask them to take out their own savings at a time like this is adding salt to an injury.
“The MTUC’s stand is simple in the current situation; do not touch the workers’ EPF, cut their salaries or retrench them because the social repercussions are indeed serious. We urge the government to rethink this plan and scrap it,” he said.