MEF, Labour Unions Urge EPF to End Withdrawal Schemes
Are You Hiring?
Find candidates in 72 Hours with 5+ million talents in Maukerja Malaysia & Ricebowl using Instant Job Ads.
Hire Now
The Malaysian Employers Federation (MEF) stated that the Employees' Provident Fund (EPF) should not implement any more withdrawal schemes from its savings before its members reach their retirement age of 60 to ensure they have enough savings.
Withdrawal schemes risk members of falling into old-age poverty
MEF is concerned that recent withdrawals from EPF members' savings through the i-Lestari, i-Sinar, and i-Citra facilities, totalling RM101.1 billion, have exposed members to the risk of falling into old-age poverty.
MEF president Datuk Syed Hussain Syed Husman said that the government should not permit any more withdrawal. He explained that members who made withdrawals from their EPF savings over the Covid-19 period would need to work for four to six years just to cover the amount they withdrew.
He said that these employees would not have enough EPF savings for their retirement because the retirement age is unlikely to be raised. Instead of withdrawing from EPF savings, he said that the government should think of other ways to help these employees.
MEF also suggested that the current policy of allowing one-third withdrawal at age 50 and total withdrawal at age 55 be reconsidered.
Syed Hussain said that since the government raised the retirement age from 55 to 60 years, it is no longer relevant for EPF members to withdraw their EPF savings at the age of 55. According to him, it is very concerning that only 3% of Malaysians can afford to retire comfortably in the current situation.
MTUC also calls for EPF to stop withdrawal schemes
The Malaysian Trades Union Congress (MTUC) hoped that the government would stop allowing withdrawals from the i-Citra scheme and instead focus on providing additional incentives to the people.
Acting president cum deputy president Mohd Effendy Abdul Ghani stated the government should continue to offer additional support to small businesses through grants, subsidised loans, and credits as part of stimulus packages, whether through banks or government agencies.
He said there are more than 40 different loan programmes that cover various sectors.
Mohd Effendy explained that proposals to help the EPF rebuild savings, such as focusing on high-value projects or offering different dividend rates, would not be enough. It is because the impact was too small to change the dire situation that most EPF members face.
He said that it's because almost half of EPF members have less than RM10,000 in their accounts. He added that many members asked for additional withdrawals as they faced outstanding debts or had to make up for their business losses despite the economic recovery.
.jpg)
Approximately 48% of EPF members under 55 currently have critically low savings.
Savings withdrawals violate EPF's goal?
Meanwhile, the Union Network International-Malaysia Labour Centre (UNI-MLC) claims the EPF would violate its objective if it were to allow continued savings withdrawals.
Its president, Datuk Mohamed Shafie BP Mammal, said that every statutory body related to the labour and employment system serves a purpose, and it must be defended for the welfare and overall protection of workers today and in the future.
He stated that the government, particularly the Ministry of Finance, should take immediate action on this issue for the sake of EPF contributors' future.
He explained that since withdrawals from savings via i-Citra could pose threats of a decent living post-retirement, the EPF should end the scheme immediately.
Government's responsibility to help workers in need
The National Union of Seafarers of Peninsular Malaysia (NUSPM) also spoke out against continued i-Citra withdrawals, claiming that it is the government's responsibility to assist workers in need.
Executive Secretary Ikmal Azam Thanaraj Abdullah said that banks were supposed to provide leniency to those who had problems with debt repayment and that members could complain to Bank Negara Malaysia if they did not provide help.
He said that the Credit Counseling and Debt Management Agency (AKPK) could assist members in restructuring any consumer loan and managing their debt burden.
Currently, 48% of EPF contributors under 55 have insufficient savings, which is worsened by recent statistics revealing that a Malaysian male has a life expectancy of 72 years and a Malaysian female has a life expectancy of 77 years.
The total amount of EPF special withdrawals has now reached RM101 billion, with 7.35 million members involved.