14th July 2021 - 3 min read
A few financial experts have stepped forward to criticise the government’s decision in allowing another round of Employees Provident Fund (EPF) withdrawal. The comments came following the kick-off of the i-Citra withdrawal facility on Monday – the third of such facilities to be allowed by the EPF since the start of Malaysia’s battle against the Covid-19 pandemic.
According to these specialists, it is crucial to find alternative ways to help Malaysians who are in need instead. They said that in most cases, individuals who need to dip into their retirement funds would have likely had very little left in it in the first place. In fact, most would have already taken most of it out under the initial i-Lestari and i-Sinar schemes.
Specifically, economist from Sunway University, Dr Yeah Kim Leng said that the government should increase the budget for those in the B40 and lower M40 groups, provided in the form of cash payouts. He also stated that about 20% to 30% of those who were previously in the M40 category, but have now fallen into the B40, are also in need of help.
“We cannot continue with stop-gap measures. We have to look for long-term solutions to ensure that people are able to at least meet their basic needs,” said Dr Yeah, adding that vaccination efforts should also be intensified to enable the reopening of economic activities as soon as possible.
“The longer we wait, the higher the possibility that many more businesses will shut down, leaving more people unemployed. If that happens, the economy could be permanently damaged,” Dr Yeah further said.
Meanwhile, the director of Finwealth Management, Felix Neoh said that only individuals who are out of options should resort to the i-Citra withdrawal scheme. “People must realise that EPF savings are for retirement. The more you withdraw from it, the lower the savings you have left for your retirement. If anyone makes a withdrawal, he should have a plan to replenish it once his income returns to normal,” he said.
Additionally, Neoh cautioned Malaysians against withdrawing from EPF savings for investment purposes as there is no guarantee that they will profit from it. Keeping their EPF savings, on the other hand, will ensure that they earn a minimum yearly return.
A recent interview by the chief executive officer of the EPF, Datuk Seri Amir Hamzah Azizan revealed that 42% of EPF contributors (equivalent to 6.3 million people) have less than RM10,000 in their Akaun 1, whereas 9.3 million individuals have less than RM10,000 in Akaun 2. He also noted that the 6.49 million contributors who dipped into their EPF savings via the i-Sinar initiative were predominantly in the B40 and lower M40 groups.
(Source: The Sun Daily)
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