MIRI: For the past few weeks, the Employees Provident Fund (EPF) Account 1 withdrawal has been a hot issue in the country.
Most of the EPF’s contributors wanted to withdraw their savings (Account 1) after their livelihood was affected by the impact of Covid-19 pandemic.
Following the economic fallout, many workers, especially those in the private sectors, lost their jobs or had their salaries cut due to reduced hours or no demand for their work.
Initially, EPF’s terms and conditions to allow only eligible members who had lost their jobs to withdraw money from their Account 1 savings resulted in hot debates throughout the nation.
Some people felt that those who still had their jobs but were given no-pay leave or had no other source of income should also be allowed to withdraw from the account.
When tabling the 2021 Budget on November 6, Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz, announced that certain target groups would be allowed to withdraw RM500 a month for up to a year from Account 1 of the EPF savings to help alleviate their financial burden.
In April, EPF introduced the i-Lestari scheme which allowed contributors to withdraw RM500 per month for a period of 12 months benefiting about 4.7 million people and involving funds worth RM11.6 billion.
However, the government is still studying the suggestion of allowing more eligible contributors to withdraw their saving from Account 1.
The New Sarawak Tribune managed to talk to some individuals for their views on the topic.
“First and foremost, it is important to remember that EPF is a long-term retirement savings scheme. It is not supposed to be like a bank account where you can drop in and withdraw funds,” opined Cr Karambir Singh.
“For the private sector and even some government sector employees, their EPF savings offer them the only financial safety net after retirement,” he explained.
Therefore, the government and EPF trustees must take an extremely cautious approach in allowing these funds to be utilised before retirement.
“Especially so for Account 1, as this is meant to be virtually untouchable before retirement,” he said.
“If an individual’s Account 1 is reduced by withdrawals prior to retirement, their financial security in their old age will be significantly reduced,” explained Karambir.
“Since the government has allowed such withdrawal schemes for a certain timeframe and limits, I advise individuals to only do so only if they are in dire financial circumstances.
“There will be people withdrawing the money for “wants” rather than for “needs”.
“Using this scheme as a monetary tool to boost the economy might look like a good short term solution. However, it can cause longer-term poverty issues amongst the retired community in the future,” he cautioned.
Sharing the same sentiment as Karambir was Iqbal Abdollah.
“I am a contributor to EPF and previous initiative, i-Lestari, has helped me a lot. However, the withdrawal of Account 1 through the i-Sinar initiative has its pros and cons,” he said.
He added the good thing about this initiative was that it focused on members who were badly affected, namely, those who lost their jobs due to Covid-19.
“Because no one knows how the pandemic (Covid19) will end and when our economy will back to normal again, is the amount in Account 1 sufficient to help solve our financial problem in the long term?,” said Iqbal who is also a civil servant.
Iqbal felt that EPF should work together with other agencies such as Credit Counselling and Management Agency (AKPK) in providing advisory services to potential applicants.
Sawing Bajing said a proper mechanism should be made before allowing members to withdraw their savings from Account 1.
“Set a limit for the amount that they can withdraw, for example RM1,000 per month based on members’ eligibility,” he pointed out.