10th March 2023 - 2 min read
Prime Minister Datuk Seri Anwar Ibrahim has said that Employees Provident Fund (EPF) contributors will be allowed to use the savings in their Akaun 2 as collateral for emergency loans from banks. This is specifically for those who are truly struggling with their financial circumstances, and are in desperate need of cash.
The prime minister announced this measure during his winding-up speech for the policy stage of Budget 2023, at the heels of repeated calls from various parties to allow further EPF withdrawals. He also said that while leeway was provided during Covid-19 – referring to i-Lestari, i-Sinar, i-Citra, and the RM10,000 special withdrawal facilities – such relaxations should now end as the EPF is ultimately meant to be preserved as retirement savings. Other countries that allowed similar assistances – such as Australia, Peru, and Chile – too, have halted such aids.
“Instead, I suggest another method to assist those who desperately need cash. I will make sure that EPF will provide space to allow contributors with enough savings who are in dire straits to borrow from the bank, with their savings used as collateral,” Datuk Seri Anwar further said, adding that the provident fund will need to examine the best method to implement this measure.
Datuk Seri Anwar also explained that employing a collateral agreement is better than allowing another withdrawal as it provides flexibility for contributors from the informal sectors, as well as those who are self-employed with inconsistent income. “This is a better option for those who are tied with their business debts, which can reach up to RM200,000 in certain circumstances. In some cases, contributors are also tied as they have the money (in their account) but cannot withdraw it,” he said.
Prior to this, several parties have urged the government to consider giving yet another one-off targeted withdrawal from the EPF for individuals who are affected financially to alleviate their burden. These included former prime ministers, Tan Sri Muhyiddin Yassin and Datuk Seri Ismail Sabri Yaakob.
Meanwhile, the revised Budget 2023 has been passed at the policy stage with a majority voice vote, and will now enter a round of debate at the committee stage. If approved, it will then go on to Dewan Negara for a final reading.
Subscribe to our exclusive weekly newsletter and we’ll bring you the week’s highlights of financial news, expert tips, guides, and the latest credit card and e-wallet deals.
Stay tuned for what’s to come next in the personal finance world