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Bank Negara Can Assist If EPF Account-1 RM 10 000 Withdrawals Are Allowed

Former Prime Minister Najib Razak said Bank Negara Malaysia (BNM) can help the government and the Employees Provident Fund (EPF) deal with pressure on the domestic bond market in the event people are allowed to withdraw from their Account 1.

He said approval had been given to 4.57 million depositors to make monthly withdrawals from their EPF Account 2 under the Prihatin economic stimulus package’s i-Lestari scheme, announced by the government in March.

He said from April to August 2020, a total of RM7.48 billion was withdrawn by EPF contributors.

He said based on this previous experience with the i-Lestari programme, there may be up to RM45.7 billion in one-off withdrawals from Account 1 if the scheme was implemented.

“If EPF or the government is worried about the pressure on the domestic bond market as a result of bond liquidation of up to RM45.7 billion in a short time to fund the one-off scheme payments, BNM can help as they are allowed to purchase from the domestic bond market if necessary.”

Najib added that EPF had also announced that they made RM15.12 billion in profits for three months in the second quarter of the year.

“EPF also announced that the number of assets they invested in is worth RM929.64 billion as at June 30, where 49.2% of the investments are in the form of bonds.”

He said having BNM buy over the EPF bonds to fund the scheme was not risky as Malaysia and the world were seeing a negative inflation due to economic headwinds.

“In fact, EPF can also choose to make these one-off payments on a monthly basis in three or six months.

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“And when the money reaches the rakyat who are in need, and they spend the money, this will also boost the domestic economy.”

Previously, Najib had suggested that the government allow the public to withdraw from their first EPF account.

However, Prime Minister Muhyiddin Yassin said this would be very risky.

Speaking at an event in his constituency of Pagoh, Johor, yesterday, Muhyiddin said EPF contributors will face “bigger problems” in the future if Putrajaya allows them to withdraw money from their EPF Account 1 now. This money is supposed to be used after retirement by EPF contributors.

Muhyiddin said there had been calls for contributors to be allowed to withdraw from Account 1 now because of the economic impact the Covid-19 pandemic had on the people, with many retrenched.

Muhyiddin said he knew he could not advise the people to be frugal in their spending as he was worried that such advice would not be well-received.

EPF members usually use their Account 2 to reduce their housing loan repayment to save on their interest. Others also depend on it for their tertiary education and medical needs.

However, in March this year, the government announced that some 12 million Malaysians will be allowed to withdraw RM500 monthly from their EPF Account 2 for the next one year, as part of measures to help the public cope with the financial impact of the Covid-19 restrictions.

Source : FMT

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