Economist: Help EPF Members Replenish Accounts After Covid-19-Related Withdrawals
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(Image: Bernama)

Economist Dr Barjoyai Bardai has said that efforts need to be made to help Employees Provident Fund (EPF) members replenish their retirement savings, with about 6.1 million EPF members having made pre-retirement withdrawals during the Covid-19 pandemic. 

In this regard, Dr Barjoyai suggested that the EPF could work with the Ministry of Finance (MOF) or financial institutions to provide a loan facility to EPF members for this purpose. The loan could be offered up to RM50,000 – with a very low interest rate of about 1% – which can then be used to earn interest or profit through the EPF.

“The money must go directly to [the] EPF [members’ accounts] to boost [their] savings, and over 10 years, the savings can increase by more than RM50,000 if contributions from the employee and employer are taken into account, based on 6% [EPF] returns per year,” Dr Barjoyai explained, adding that borrowers must be required to fully repay the loan and interest before they can withdraw the balance of their EPF savings.

(Image: Berita Harian)

The economist also said that borrowers should be required to abide by certain conditions in order to take up the loan. For instance, it can be specified that borrowers can only withdraw their EPF savings after they turn 60. Currently, EPF members are allowed to fully withdraw their savings from Akaun 55 upon reaching the age of 55. Meanwhile, EPF members aged 60 and above can fully withdraw their savings from both Akaun 55 and Akaun Emas. 

Dr Barjoyai further noted that such solutions are necessary as millions of EPF members could be at risk of hardcore poverty if their EPF savings are fully depleted. This will then turn into a long-term burden on the country as the government will be forced to provide additional and continuous assistance to the people. 

In addition to Dr Barjoyai’s suggestions, Malaysian Employers Federation (MEF) president, Datuk Dr Syed Hussain Syed Husman also proposed for the government to consider offering tax incentives for individuals who continue to work beyond the retirement age of 60. That said, he believes that the current retirement age should be maintained, with employment beyond the age to be based on mutual agreement. 

(Image: The Star)

Datuk Dr Syed Hussain also reiterated that employees should be trained on financial literacy earlier on, and not only as they are about to retire. “This will ensure employees are aware of the importance of keeping their money for retirement and not depend fully on their EPF savings after retirement,” he said, adding that the current EPF statutory rates of contributions are sufficient.

To date, the EPF has allowed four Covid-19-related withdrawal facilities, namely i-Lestari, i-Sinar, i-Citra, and the RM10,000 special withdrawal, to help its members cope with the impacts of the pandemic. On top of these facilities, the EPF also lowered the statutory contribution rate for EPF members to 9% from 11% from April 2020 to June 2022, before raising it back to 11% in July. These significantly reduced EPF members’ savings, with 6.1 million members now having less than RM10,000 in their EPF accounts, of which 3.6 million members have less than RM1,000.

(Source: The Sun Daily

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