EPF members running out of funds

(The Star) – With median savings down to between RM3,300 and RM5,000 among Employees Provident Fund’s (EPF) low-income contributors, the government is adamant about not allowing another round of special withdrawals.

Deputy Finance Minister I Datuk Seri Ahmad Maslan said some 8.1 million EPF members had seen their median savings reduced by 50% in 2022 during the Covid-19 pandemic when special withdrawals were allowed.

“The median savings for all races of EPF contributors went down from RM16,600 in 2016 to RM8,100 in 2022.

“To break it down by race, about seven million Malay EPF members had a median savings of RM16,900 in April 2020, and now they only have an average of RM5,500.

“Other Bumiputera members, about 1.4 million of them, are now left with an average of RM3,300 in savings only from an average of RM10,600.

“Now (on average), members have RM3,300, RM5,000 … how can we allow any more withdrawals?” he asked when responding to a supplementary question from Mohd Syahir Che Sulaiman during Question Time in the Dewan Rakyat yesterday.

Mohd Syahir had requested that the ministry detail the steps taken to increase the amount of dividends paid from Syariah-compliant investments.

Prime Minister Datuk Seri Anwar Ibrahim had previously hinted that no more special withdrawals would be allowed, and the government was looking for other alternatives to help those in need without resorting to their EPF savings.

Some RM145bil was withdrawn from the EPF by 8.1 million members during the Covid-19 pandemic.

Last year, 5.3 million members took out RM20.8 billion through the i-Lestari programme, 6.6 million members took out RM58.7bil through i-Sinar, 5.2 million members took out RM21.4bil through i-Citra, and 6.6 million members took out RM44.6bil through the EPF’s special withdrawal programme. In 2020, there were 4.7 million members with less than RM10,000 in savings.

“B40 and M40 members are the most affected, causing a widening gap with the T20 group,” said Ahmad.

As at December last year, EPF had 15.72 million members, with slightly more than half of them classified as active members.

EPF also has 598,268 employers who have contributed to the retirement fund.

Ahmad said there were various proposals on raising the voluntary contributions to the EPF, which are currently set at RM60,000 a year.

“Further announcements on that will be disclosed when the Budget 2023 is tabled on Feb 24,” Ahmad said.

On Wednesday, Perikatan Nasional chairman Tan Sri Muhyiddin Yassin urged the government to consider giving one-off targeted EPF withdrawals to those who are financially strapped.

He said there was “nothing wrong” with allowing another round of withdrawals.