1st March 2021 - 3 min read
The Employees Provident Fund (EPF) has revealed that about 30% of its members – equivalent to almost 1.6 million people – may have nearly emptied their Akaun 1 savings. Meanwhile, another 60% – or 3 million members – are noted to have or will use up all savings in their Akaun 2. This is following the introduction of several initiatives aimed at alleviating the public’s financial needs during the ongoing Covid-19 pandemic.
“Don’t forget that Akaun 2 is to be utilised for other forms of withdrawals like housing, medical, and education. Without Akaun 2, our members will not be able to use some of their savings to invest in a roof over their head, upgrading skills and health,” said Tunku Alizakri Alias during the EPF 2020 performance briefing last Saturday.
During the briefing, Tunku Alizakri also shared several other worrying statistics. He noted that the savings adequacy levels are expected to decline, with the number of members meeting their basic savings dropping from 22% (3.3 million) to less than 20% (3 million) due to various Covid-19 financial aid programmes had been rolled out. The number of active members meeting basic savings also saw a dip, from 36% (2.7 million) to 28% (2.1 million) post-Covid-19.
Meanwhile, the contribution collection for 2020 is seen to have increased by 3.3% from RM75.9 billion in 2019 to RM78.4 billion – but it was also accompanied by a soar in withdrawals. In 2020, withdrawals had increased by 30.1% to RM58.3 billion, compared to RM44.8 billion in 2019. As such, net contributions for 2020 was found to have gone down by 35.4% to RM20.1 billion, compared to RM31.1 billion in the previous year.
For context, 2020 saw the EPF introducing several initiatives in a bid to help Malaysians weather through the financial storm brought on by Covid-19. Of note is the temporary reduction in contribution rates from 11% to 7% (for members below age 60), the i-Lestari withdrawal scheme, as well as the i-Sinar initiative.
According to Tunku Alizakri, as much as RM130 billion in funds have been allocated for these Covid-19 initiatives. To break it down, an estimated RM13.6 billion was allocated for the reduction in contribution rates. Meanwhile, RM20 billion and RM90 billion were earmarked for the i-Lestari withdrawal scheme and i-Sinar initiative, respectively. An additional RM85 million was also set aside for employers who deferred their contributions due to cashflow issues.
That said, Tunku Alizakri – whose term as the chief executive officer of EPF had ended over the weekend – also stated that the EPF will carry out more effort to educate its members. Additionally, it will come up with products and services to ensure that members continue to trust the EPF as the place to keep their retirement savings.
During the weekend briefing, the EPF had also declared a dividend of 5.2% for its Simpanan Konvensional, and 4.9% for its Simpanan Shariah. While the 5.2% rate was noted to be the lowest return offered in more than a decade, it is touted to have been better than expected, given the turbulent global economic climate due to the pandemic.
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