EPF lifeline?

PETALING JAYA: The proposal to allow employees to dip into their retirement fund has turned into a debate of meeting short-term pecuniary needs versus long-term financial security.

Unions are all for giving workers access to their Employees Provident Fund (EPF) Account 1 but employers have warned that such a move could be devastating for the country’s future.

The Malaysian Trades Union Congress (MTUC) has suggested that cash-strapped EPF contributors be allowed a monthly withdrawal from their Account 1 savings to meet their immediate financial needs.

While its president, Datuk Abdul Halim Mansor, agrees that it should be a last resort, he also pointed out that about 2.2 million EPF contributors already have very little money left in their Account 2.

Account 1 is strictly for retirement and contributors are allowed to withdraw up to 70% of what they have only when they reach 55 years of age.

However, a contributor may withdraw from Account 2, which makes up 30% of his entire EPF savings, to meet various needs such as medical fees or to purchase a house.

Prime Minister Tan Sri Muhyiddin Yassin had said earlier that more people were seeking the green light to withdraw from Account 1 of their EPF savings.

However, he said, it would be difficult to implement given that the government has already disbursed billions in cash aid.

Halim conceded that it is a tough decision for EPF to make given that it contradicts the EPF Act 1991, but he pointed out that such assistance is needed by those desperate for financial help.

“It can be done if EPF allows eligible contributors to withdraw a specific sum of money from Account 1 each month to meet their immediate financial needs,” he told theSun yesterday.

“This is better than a one-off withdrawal that can have a negative impact on overall dividends,” he added.

In May, the EPF approved applications from 3.5 million contributors to withdraw RM500 each from their Account 2 under the i-Lestari scheme. A total of RM1.66 million was withdrawn under the scheme.

However, SME Association of Malaysia president Datuk Michael Kang is opposed to such a move.

“It will lead to a disastrous future for them and the country.”

He said it is critical now for the government to introduce policies to prevent Malaysians from falling into a “financial pit of no return”.

“What is important here is a policy that favours the people.

“There already are many initiatives to sustain (those in financial trouble). There is no need for them to dip into their pension funds,” he told theSun.

Kang noted that policies such as the extension on the moratorium on loan repayments have significantly helped many to cope with their financial difficulties.

“The EPF Account 1 is to secure our future,” he said.

Shafiqah Munira, 36, said the sum she managed to withdraw from Account 2 of her EPF savings was not enough to support her family of six.

“My husband has just lost his job so I am now the sole breadwinner. Being an only child, I also have to support my parents, apart from taking care of my four children. It is very stressful,” she said.

Shafiqah, who has a full time job as a sales representative, said she has also started a small business selling cookies but it has not helped to improve her financial situation substantially. “We are scraping the bottom of the barrel to survive,” she said.

Source: TheSunDaily