PR1MA loan applicants’ Account 2 to be ring-fenced

  • Datuk Shahril Ridza Ridzuan
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This article first appeared in The Edge Financial Daily, on November 1, 2016.


KUALA LUMPUR: The Employees Provident Fund (EPF) said applicants of the “step-up” end-financing scheme for the 1Malaysia People’s Housing Programme (PR1MA) — which was announced in Budget 2017 — will not be able to make any other withdrawals from their EPF Account 2, at least not until their PR1MA loan is settled.

EPF chief executive officer Datuk Shahril Ridza Ridzuan (pic) said details of the scheme are currently being worked out with PR1MA and the banks, and for EPF, the main aspect will be ring-fencing  EPF Account 2.

“The whole idea is that by ring-fencing EPF Account 2, banks will have more assurance and will be able to give a higher loan limit to applicants. Once the applicants’ account is ring-fenced, the present and future monies in the account will be earmarked towards paying back the PR1MA housing loan provided by the banks,” he said at a press conference yesterday.

During the tabling of Budget 2017, Prime Minister Datuk Seri Najib Razak said the special scheme aims to make financing easier and more accessible to buyers, by offering up to 100% loans, with the scheme to be implemented on Jan 1, 2017.

“Once they secure the financing, applicants will not be able to use their EPF Account 2 to make any other kind of withdrawal. It’s essentially an economic trade-off. So for the individual member, they will have to decide for themselves what is more important to them — the ability to get a higher housing loan limit to buy a house or the option to use their account for future withdrawals,” added Shahril.

The ring-fencing will be removed when applicants pay off or refinance their loans, he explained.

Shahril was speaking at the launch of the e-Caruman Contribution Payment Transformation Programme, a collaboration between the EPF and Malaysian Electronic Clearing Corp Sdn Bhd (MyClear).

The initiative integrates the e-Caruman facility with FPX, an e-commerce service operated by MyClear, allowing employers to make an online remittance directly through the e-Caruman portal and mobile app with no transaction charge.

The programme is in line with the EPF’s move to reduce dependency of counter services, accelerate mobile transactions and improve the overall experience in dealing with the EPF.

“To date, over 95% of our employers are already submitting their forms to us online. By next year, we’ll be doing away with manual forms altogether. We’ve been seeing a very encouraging trend of employers picking up online payments.

“More importantly, once they’ve picked it up, they never revert back to manual payments, which means that employers realise the benefits and savings in terms of time and money,” said Shahril.

On the retirement fund’s dividend outlook, he said the EPF is on track to meet its targeted dividend at the rate of inflation plus 2% amid uncertainties in the global economy.

“Just like other funds, we suffered too due to market volatility and poor returns on fixed income. And of course the lower interest rate and yields across all markets are a primary concern to us and other long-term savings institutions. We are still on track to meet our target but it has been a challenging year,” he said.