Economists pan call for EPF Account 2 withdrawals
They say a long-term perspective is needed, and that contributors already run the risk of not having enough savings for their retirement.
(FMT) – Economists have disagreed with a proposal to allow EPF contributors to make emergency withdrawals from their Account 2 in addition to the newly announced Account 3.
Barjoyai Bardai of Universiti Tun Abdul Razak said the four special withdrawals totalling RM145 billion allowed during the Covid-19 pandemic would have an adverse effect on the 5.2 million EPF contributors in the M40 and B40 income brackets.
Speaking to FMT, he said they risked having insufficient savings upon reaching retirement age.
“This (allowing the special withdrawals) was a mistake, so we cannot repeat it,” he added.
Beginning May 11, monthly EPF contributions will be split three ways: 75% into Account 1 (Akaun Persaraan), 15% into Account 2 (Akaun Sejahtera) and 10% into Account 3 (Akaun Fleksibel).
Savings in Account 3 can be withdrawn by members at any time for any purpose, subject to a minimum withdrawal amount of RM50.
Currently, 70% of monthly contributions are channelled into Account 1, which remains inaccessible until retirement.
The remaining 30% is directed to Account 2, accessible for education, healthcare, housing, and a partial withdrawal at age 50.
Opposition leader Hamzah Zainudin had said that contributors earning below RM5,000 should be allowed to make special withdrawals of RM300 a month for a year through Account 2, in addition to withdrawals from Account 3.
The Bersatu secretary-general said such withdrawals could help contributors cover their cost of living as withdrawals from Account 3 alone would not be enough.
However, Barjoyai suggested altering the mechanism for contribution splits according to need, including increasing the amount deducted for Account 3 from the set 10%.
“There’s no need to touch Account 2 because it serves a different purpose,” he said.
“We need to look at the long term because the goal is to ensure the welfare of the people. We don’t want what happened before, when everyone was allowed to make withdrawals.”
Abu Sufian Abu Bakar, a former finance and banking lecturer at Universiti Utara Malaysia, said contributors should not consider their EPF savings “as an ATM machine” from which to withdraw funds as and when needed.
“Withdraw EPF funds only when truly needed. If people withdraw RM300 a month as proposed, they will become too reliant on it,” he said.
He said there was also a possibility that some contributors could lose their source of income before they retire.
“If, for example, we fall ill at the age of 47 or 48, this is when we need assistance from this fund. Don’t just think about withdrawing now, we might suffer in the future,” he said.
