Account 1 withdrawal draws ire from MP
(Focus Malaysia) – DESPITE criticism from various quarters, the Employees Provident Fund (EPF) forged ahead to allow withdrawals from Account 1 effective next month.
Through a programme called i-Sinar, the pension fund would be dishing out RM14 bil to benefit its two million contributors.
“After a thorough study, the EPF has decided to widen the scope of i-Sinar to cover active members who have lost their jobs, given no-pay leave or have lost their source of income,” it said in a statement yesterday.
Two weeks ago, Finance Minister Tengku Datuk Seri Zafrul Tengku Aziz announced that EPF contributors will be allowed to withdraw money from the Account 1 due to the economic slowdown.
The Government had initially allowed withdrawals from Account – under the i-Lestari programme – to help contributors to mitigate the effects of COVID-19.
Under the i-Lestari programme, contributors are allowed to withdraw RM500 monthly from their Account 2.
The idea to withdraw from Account 1 received brickbats from many quarters given most contributors do not have enough savings in their retirement fund as it is.
The statement was confirmed by Tengku Zafrul himself last week, saying that 32% of EPF contributors have less than RM5,000 in their Account 1, with another 10% only having between RM5,000 and RM10,000.
Elaborating on the new move, EPF said there are two set of rules that will be applied for the i-Sinar programme; one is for those who have less than RM90,000 in Account 1 and the other is for those who have above RM90,000.
Two sets of criteria
Both categories will only be allowed to withdraw a maximum of 10% of their Account 1 savings.
“For those who have less than RM90,000, they will be allowed to withdraw a maximum of RM9,000. The payment will be staggered over a period of six months, with an increased first advance of up to RM4,000.
“For those who have RM90,000 and above, they will also have access of up to 10% of their Account 1 savings. However, the maximum total amount allowed to be advanced is RM60,000.
“The amount advanced will be staggered over a period of six months, with an increased first advance of up to RM10,000,” noted EPF.
The pension fund added that applications can be made starting next month and the funds will be credited to the applicants’ chosen bank accounts by January next year.
In view of the latest decision, EPF also announced that contributors who sign up for the i-SInar initiative will be required to replace the full amount advanced in the future.
“It means all future contributions will be 100% credited into Account 1 until the amount taken has been replenished.
“Thereafter, contributions will revert back to 70% to Account 1 and 30% to Account 2 like in the past,” it said.
Irresponsible decision
On related matter, DAP MP Charles Santiago panned the idea, saying tapping into workers’ savings to support Government’s social protection policies was outright irresponsible.
“The Government should be spending for the poor. Now, they are using the people’s own money instead,” he told FocusM.
He said that based on the Government’s own data, a significant number of Malaysian workers live in poverty and the latest move would lead to a complete loss in financial security upon retirement.
“The combined withdrawals will have an impact on the future earning capacity of workers through loss of dividends plus the compounding interests in lost savings,” lamented the Klang MP.
Offering a solution, Santiago said the Government can always scrap funds allocated for certain projects under Budget 2021 as it would not benefit the public at this juncture.
One of it, he said, was the RM85.5 mil allocation to revive the controversial Special Affairs Department (Jasa), which was shut down by the previous Pakatan Harapan government.
“We also have the Penggerak Komuniti Tempatan (RM8.63 mil), Prime Minister’s Office’s Special Projects Fund (RM 1 bil) and Finance Ministry’s Capital Injection Initiative (RM13.61 bil).
“So, it’s not the Government does not have the money. It has no qualms allocating millions for projects considered as propaganda and political in nature, putting up buildings to promote individual personalities or appointing 70 people as Cabinet members.
“So the question is, does the Government have the political will to help Malaysians in need?” asked Santiago.
