EPF: Allowing members access to Account 1 not an easy decision

EPF: Allowing members access to Account 1 not an easy decision
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KUALA LUMPUR (Nov 6): The Employees Provident Fund (EPF) said the decision to allow contributors access to Account 1, as announced in Budget 2021 today, was not an easy one.  

“Allowing members access to their EPF retirement savings other than what is provided for under the EPF Act 1991 is unprecedented and has never been done before,” chief EPF officer Tunku Alizakri Alias said in a statement. 

He noted that Account 1 (70% of savings) has always been designated for retirement while Account 2 (30% of savings) is meant for discretionary withdrawals.  

“Given the complexity of the situation, it was not an easy decision that could be made in a hurry. However, we found a middle ground to allow members access to their savings without jeopardising their future retirement,” said Alizakri. 

Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz, in his Budget 2021 speech, announced a targeted Account 1 withdrawal facility of RM500 per month, up to a maximum of RM6,000 for 12 months.  

He said the withdrawal facility aims to assist members who have lost their jobs, and the move is expected to alleviate the financial burden of 600,000 affected members. 

Alizakri said the additional withdrawal facility is very specific and targeted to members who really need the cash relief.  

“This will be a short-term and once-in-a-lifetime facility providing some measure of relief for the most vulnerable and unprotected groups, while maintaining the EPF’s mandate to safeguard members’ retirement savings,” he said. 

“While the EPF is aiming to allow for the application for the additional targeted withdrawal facility to proceed in January 2021, further details on this will be announced by Nov 11,” he added. 

The finance minister also announced in Budget 2021 that EPF contributors will be allowed to withdraw from Account 2 to purchase insurance and takaful products covering life or family as well as critical illness from approved insurance and takaful operators. 

Alizakri, in his statement, said the products, which will be offered through i-Akaun, will be customised for EPF members at affordable premiums and comes with additional features. 

He said the EPF also welcomes the government’s decision on the reduced minimum statutory contribution rate for employees to 9% throughout 2021, which takes into consideration the depressed economic condition as well as its members’ reduced income. 

“The Covid-19 pandemic is still here and we have to live with it for the next few years. We hope that the extra money in our members’ pocket will increase their disposable income and spur domestic consumption,” he said. 

The EPF also pointed out that while these measures are the response to members’ immediate concerns and cover the short-term gaps during this unprecedented health and economic crisis, “there must be steps taken to urgently address the shortcomings in the country’s social protection system, which this pandemic has revealed to be inadequate in addressing the social well-being of Malaysians”. 

“Given that EPF represents almost 50% of the Malaysian population with a total of 14.6 million members, we will take a very active stance on giving our views and assisting the government in creating a holistic solution to achieving social well-being for our members in particular, and Malaysians at large. 

“We will be active in championing social protection together with other agencies and bodies through MySPC (Malaysia Social Protection Council) and will seek to enhance the social protection system for the future of Malaysians,” said Alizakri. 

The EPF said it will also bolster its outreach programmes to empower and equip its members with financial knowledge that they may be able to face future financial challenges while also assisting them in upskilling themselves. 

“We urge members to make an appointment with our Retirement Advisory Service (RAS) officers to help plan their finances effectively and seek advice on the solutions available,” said Alizakri. 

For more Budget 2021 stories, click here.

S Kanagaraju