Should the EPF allow more withdrawals to help the rakyat?

By ZAIDI ISHAM ISMAIL
[email protected]

KUALA LUMPUR Dec 13 - For the past two years, the Employees Provident Fund (EPF) has lived up fully to its name which is to provide for the rakyat.

Amid the pandemic, EPF has devised various i- programmes such as the i-Citra, i-Sinar, i-Lestari to assist cash strapped members affected by COVID-19.

To date, the EPF which is one of the world's top 5 largest provident funds has distributed a total of RM70 billion to about half of its 13 million members.

COVID-19 seemed to have eased up a bit and various economic sectors all well as inter-state borders have reopened.

Some Malaysians are already re-employed and businesses are gaining traction.

This give rise to the question- should EPF which has about RM1 trillion in assets give another round of cash aid?

Rumours are rife that a fresh round of withdrawal is being discussed between Prime Minister Datuk Seri Ismail Sabri Yaakob and Financial Minister Tengku Datuk Seri Zafrul Abdul Aziz.

Umno Youth leader Datuk Dr Aysraf Wajdi Dusuki claimed a new i-product will be rolled out in January next year to replace the current i-Citra which paid its final RM1,000 out of RM5,000 on Dec 1.

EPF still solid as a rock

Universiti Putra Malaysia Business School lecturer Associate Professor Dr Ahmed Razman Abdul Latiff said : Looking at the investment income growth for EPF in the first half of 2021, I am confident that EPF can still afford to generate reasonable returns on investment for its contributors as well as cater to the withdrawal needs."

Razman said EPF is expected to generate a minimum of RM70 billion gross income by the end of this year and it can still give at least 5% of dividends for 2021.

"Every year, EPF would always generate a surplus of between RM20 billion to RM30 billion and so this amount is enough for EPF to continue focusing on its strategic assets allocation with the main objective of generating higher return on the investments for its members," said Razman.

EPF warns of insufficient retirement funds

Amid all the pros and cons, the EPF has always maintained that the withdrawals will affect the retirement savings of some Malaysians.

This is because as it is, 54 percent of its contributors age 54 years below have less than RM50,000 in their accounts, said its chif strategy officer Nurhisham Hussein at a forum in October.

The National Union of Bank Employee had said that instead of giving rebates and incentives to the rakyat, the government had instead resorted for the rakyat to use their retirement savings.

"Thus it is proper for the government to replenish the money when the situation improves," said its secretary general J.Solomon.

One of the suggestions that is being bandied about is to raise the retirement age to 60.

Since it is the government which "forced" EPF's hand to allow the wirhdrawal, then it is proper for it to replenish contributors' savings.

And the government could replenish gradually and once its coffers are stable to avoid pressure on its fiscal position.

A matter of survival

From whichever perspective, whether from the EPF or the rakyat, both sides have to be rational and realistic.

It is true that retirement savings will be severely impacted, but at the same time, some segments of the rakyat are suffering and the B40 has ballooned to B50.

A retrenched newspaper worker said : It is easy for the corporate captains and the employed to oppose the withdrawals as they still receive their fat salaries and have company drivers.

"But for me, I once had only RM300 in my wallet to last an entire month and was worried sick on how to put food on the table for my family," he told DagangNews.com.

Cool heads must prevail. - DagangNews.com