The Employees Provident Fund (EPF) has cautioned that Malaysia’s capital markets will be negatively impacted if a massive withdrawal of EPF savings were to take place following any “erosion of trust” towards the agency.

This remark came as the EPF noted that more than RM270 billion in savings can be withdrawn at any moment by members who are aged 55 or 60 years old and above, or those who have more than RM1 million in their accounts. For context, EPF members who are aged 55 years old and above can make a full withdrawal from their Akaun 55, whereas those aged 60 years old and above can withdraw from both Akaun 55 and Akaun Emas. Meanwhile, those who have more than RM1 million in their accounts are entitled to make partial withdrawals.

According to the provident fund, this erosion of trust could happen if it were to allow further withdrawals of EPF savings, following some calls to allow another round of the i-Citra scheme for individuals affected by the recent floods. “It is feared that such erosion of trust towards the EPF may force these members to withdraw their money en masse, causing a negative impact on the country’s markets as EPF is a major pillar in the holding of capital market and financial investment assets in the country,” it said in a statement.  

The EPF also took the opportunity to emphasise its role as a provident fund and trustee to all members’ retirement future. As trustee, the EPF said that it has a fiduciary duty to uphold the equitable interest of all its members, particularly as there are still millions of other members who have steered away from withdrawing their EPF savings in hopes of better returns for their golden years.

Additionally, the provident fund stressed that the introduction of the i-Lestari, i-Sinar, and i-Citra schemes was exceptional in nature, as they were only intended to assist members with their urgent cash flow needs during the extended movement control order (MCO) periods. Following the rollout of the schemes, a significant amount of RM101 billion savings had been withdrawn as of October 2021 – equivalent to 22% of the total RM530 billion that was allocated by the government for its numerous stimulus programmes since 2020.

“While the withdrawal initiatives provided some financial relief to members during the pandemic and various MCOs, the withdrawals have inevitably led to 6.1 million members now having less than RM10,000 in their EPF accounts, of which 3.6 million have less than RM1,000 – levels at which members are not able to guarantee their retirement,” said the EPF, adding that the majority of those who have made emergency withdrawals were bumiputera members (78%).

Given the gravity of this situation, the EPF reminded that the approach of using retirement savings as emergency funds will have severe consequences, especially for members who are already facing very low savings in their retirement years. This dire situation will also be compounded by other uncertainties, such as rising healthcare costs, and as such, members will need to strive to rebuild their retirement income adequacy.

(Sources: Malay Mail, Free Malaysia Today)

• TAGS:
• Employees Provident Fund (EPF)
• EPF i-Citra
• i-Citra
• i-Lestari
• i-Lestari Withdrawal Scheme
• i-Sinar
• i-Sinar Withdrawal Scheme