PETALING JAYA: The government’s decision to allow Employees Provident Fund (EPF) contributors to withdraw up to RM6,000 from their accounts has received the thumbs down all round.
The Malaysian Trades Union Congress (MTUC) sees it as “robbing” from one’s own savings, while the Malaysian Financial Planning Council (MFPC) warned that it could open a Pandora’s Box, and a former minister wants the government to review the proposal.
Prime Minister Tan Sri Muhyiddin Yassin, when making the announcement yesterday, said the money would help the people tide over the lean period caused by reduced workdays or job losses as a result of the Covid-19 outbreak.
This is over and above the reduction in EPF contribution from 11% to 7% announced earlier.
Muhyiddin said each contributor would be allowed to withdraw RM500 per month for 12 months, bringing the total to RM6,000. The money will be taken from their second account.
Only those aged below 55 qualify for the withdrawal. That accounts for about 12 million contributors.
EPF will begin taking applications for such withdrawal from April 1. The initiative is expected to benefit up to 12 million EPF members, with a total withdrawal estimated to be around RM40 billion.
MTUC secretary-general J. Solomon said the EPF savings was a worker’s safety net and it would be immoral to use those savings to cope with the financial impact of Covid-19.
“The government should have the moral courage to dig into its own reserves to pump money into the pockets of workers without having to compromise their old-age savings,” he said in a statement yesterday.
He said the government could help those affected by the economic impact of Covid-19 by giving them interest-free loans.
MFPC deputy president Dr Desmond Chong said the move could backfire on those who use the money for investments.
“While it is good for those who have zero savings and not enough money to survive, others may see it as an investment opportunity.”
He said with the market fluctuating, this would be a risky proposition. In the end, the contributor may have to work longer to accumulate the same amount of money.
Former Domestic Trade and Consumer Affairs minister Datuk Seri Saifuddin Nasution Ismail said the proposal would defeat the purpose of having the retirement fund.
“Even now, most Malaysians do not have enough in their EPF savings to sustain themselves after retirement.”
Saifuddin, who is also PKR secretary-general and Kulim-Bandar Baharu MP, said about 70% of EPF contributors have enough to last them only five years after retirement.