Economist: Help EPF Members Replenish Accounts After Covid-19-Related Withdrawals
Author Avatar
(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

5 1 vote
Article Rating

SHARE

Comments (0)

Subscribe
Notify of

0 Comments
Inline Feedbacks
View all comments
Top Personal Finance News Articles
Post Image
Petrol Price Malaysia Live Updates (RON95, RON97 & Diesel)
The RinggitPlus Team
- 30th November 2022
We provide weekly updates on every Friday at 5pm on the prices of RON95, RON97 and Diesel in Malaysia and a chart that shows the movement of fuel prices across a 6-week period. Bookmark this page now!
Post Image
Astro 4K Ultra HD Broadcast To Be Available For Subscription By The End of This Year
Brian Chung
- 14th August 2018
By the end of 2018, Astro customers will be able to watch football matches in Ultra HD. Read on to know more about the 4k Ultra HD service.
Post Image
Touch n Go RFID: What Malaysian Road Users Need To Know
Jacie Tan
- 10th August 2018
Everyone’s talking about Touch ’n Go RFID being used at Malaysian highway tolls soon – here’s what you need to know about it.
Post Image
Best High Interest Savings Accounts In Malaysia (October 2022)
Pang Tun Yau
- 5th October 2022
Make your money work for you by depositing them into the best high-interest savings accounts in Malaysia!

Related articles

Related Posts Image
Related Posts Image
Related Posts Image
Related Posts Image