EPF supports stopping of further i-Citra withdrawals


KUALA LUMPUR: The Employees Provident Fund (EPF) has asserted its dedication to assist members rebuild their retirement earnings adequacy.

In a press release Tuesday, the retirement fund stated it supports the discontinuation of any further withdrawals of EPF financial savings below the i-Citra scheme for members to make sure members’ retirement future wouldn’t be further compromised.

The EPF is a retirement fund that’s mandated to safeguard members’ financial savings for his or her future retirement wants and wellbeing.

Established since 1951, the EPF is ruled by the EPF Act 1991, which stipulates that Account 1 (70% of financial savings) is designated for retirement, whereas Account 2 (30% of financial savings) is supposed for discretionary withdrawals aimed toward securing a brighter retirement sooner or later.

“There is, however, no provision in the act that permits withdrawals under natural disasters,” it stated.

“The unprecedented scale and impact of the COVID-19 pandemic and recent natural disasters have pushed the country’s current social protection to its limits, and the approach of using EPF savings for emergency needs will certainly cause severe impact as members face very low savings in their retirement years, compounded by other uncertainties such as rising healthcare costs,” EPF stated.

EPF stated the roll-out of i-Lestari and i-Sinar withdrawals in 2020, adopted by i-Citra in July 2021, had been distinctive in nature as these initiatives had been prolonged to fulfill the pressing money move wants of members throughout the intervals of the Movement Control Orders (MCO) and the following financial slowdown.

“As of October 2021, a total of RM101bil has been withdrawn under the three withdrawal schemes.

“This is equivalent to 22% of the total RM530bil of the government stimulus programme as support for Malaysians as a whole,” it stated.

EPF identified that the withdrawals have inevitably led to six.1 million members now having lower than RM10,000 of their EPF accounts, of which 3.6 million have lower than RM1,000, ranges at which members usually are not in a position to assure their retirement.

“The majority of those who have made emergency withdrawals from the EPF were Bumiputera members.

“As a result of the withdrawals, 4.4 million or 54% Bumiputera members now have less than RM10,000, and 2.0 million or 25% have less than RM1,000.

“This is particularly worrying as the numbers show the increasing percentage of members not meeting the EPF Basic Savings threshold of RM240,000 which is the minimum amount members should have when they reach age 55 in order to have a decent retirement,” EPF stated.

The retirement fund can be involved that further leakage would erode its place as a provident fund and trustee to members’ retirement future.

As trustee, the EPF has a fiduciary obligation to uphold the equitable curiosity of all its members, extra so when there are nonetheless tens of millions of members who preserve their financial savings untouched and hope for higher returns that may see them by means of their golden years.

Currently, there are greater than RM270bil EPF financial savings that may be withdrawn at any time by EPF members who’ve reached above age 55 or 60, or those that have greater than RM1mil of their EPF account.

“It is feared that such erosion of trust towards the EPF may force these members to withdraw en masse, thus causing negative impact to the country’s markets as the EPF is a major pillar in the holding of capital market and financial investment assets in the country,” it stated, including that addressing old-age earnings safety remained EPF’s prime mandate and guideline within the growth of the retirement fund’s systemic and actionable aged care technique.

As the nation rebuilds the economic system and extra individuals are going again to work, the important thing focus now could be to enhance and rebuild EPF financial savings further.

“The EPF’s focus now is to continue to safeguard members’ savings, in line with its mandate, and bring members back to restoring and rebuilding their retirement savings to ensure they are able to secure a dignified retirement.

“The many forms of Government’s financial aid to individuals and businesses to recover from the pandemic and the recent floods should serve as the much needed relief during this difficult times, hence any future exceptional withdrawals from EPF savings should be deemed unnecessary,” EPF stated.

The EPF stated it’s appreciative that the nation’s union and employer organisations, such because the Malaysian Trades Union Congress (MTUC), Congress of Union of Employees within the Public and Civil Services Malaysia (CUEPACS), and the Malaysian Employers Federation (MEF), who had expressed their considerations over the longer term retirement of staff in Malaysia and referred to as for the discontinuation of further withdrawals of EPF funds.

“The EPF is truly sympathetic to the plight of Malaysians following the unfortunate event of the floods,” it stated.

“As a socially responsible organisation, the EPF, alongside other organisations, play an important role towards community wellbeing. In this regard, the EPF, as part of the GLIC/GLC Disaster Response Network (GDRN), has offered its support through resources within its means, which includes an allocation of RM10mil, which comes from savings derived from EPF’s budgeted operational expenditure,” it added.

“The EPF wishes to stress that there will be no material impact on members’ funds or returns as the allocation is from budgeted operational expenditure. The aid will be through in-kind donations only consisting of items needed by those affected and channeled via accredited non-profit charity organisations.”

With shut to fifteen million members, any help by means of the charity organisations and thru the efforts by EPF’s personal volunteers will profit its members and their households instantly and not directly.

“With the measures put in place to support the recovery of the economy, the EPF is hopeful that this will go a long way towards addressing the needs of the rakyat while reassuring members that it remains committed to its mandate and purpose of securing future retirement wellbeing for members,” EPF stated.

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