The Employees Provident Fund (EPF) will provide further details on the targeted EPF Account 1 withdrawal facility on November 11.
Chief EPF officer Tunku Alizakri Alias said the fund aimed to allow for the application for the additional withdrawal facility to proceed in January 2021.
“The withdrawal facility is very specific and targeted to members who really need the cash relief,” he said in a statement today.
He said that with the new wave of Covid-19 cases making an economic recovery uncertain, some EPF members were falling back into financial hardship once more.
The fund, he said, was concerned that the existing assistance that it provided may not last long enough for those in need of more cash to support themselves and their families.
Previously, the EPF introduced the i-Lestari Withdrawal facility to ease some of members’ cash flow problems and allowed them to voluntarily reduce their share of EPF contribution to seven per cent from 11 per cent for the April to December 2020 period.
It had also extended assistance to affected employers by introducing the Employer Covid-19 Assistance Programme (e-CAP), which allows eligible small and medium enterprises (SMEs) the flexibility to apply for a deferment or restructuring of the employer’s share of EPF contributions.
“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. Account 1 (70 per cent of savings) has always been designated for retirement while Account 2 (30 per cent 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,” Alizakri said.
The EPF is also looking at allowing members to withdraw from their Account 2 to purchase insurance and takaful products covering life/family and critical illness from approved insurance and takaful operators.
He said the products, to be offered through i-Akaun, would be customised for EPF members at affordable premiums and came with additional features.
According to him, the EPF also welcomes the government’s decision to reduce the minimum statutory contribution rate for employees from 11 per cent to nine per cent from January to December next year, which takes into consideration the depressed economic condition as well as its members’ reduced income.
“The EPF wishes to point 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,” he said.
Alizakri said that given that EPF represented almost 50 per cent of the Malaysian population with a total of 14.6 million members, it would take a very active stance on giving views and assisting the government in creating a holistic solution to achieving social well-being for the members 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,” he added.
The EPF will also bolster its outreach programmes to empower and equip our members with financial knowledge that they may be able to face future financial challenges while also assisting them in upskilling themselves.
He also urged members to make an appointment with EPF Retirement Advisory Service (RAS) officers to help plan their finances effectively and seek advice on the solutions available.
Budget 2021: Putrajaya allows RM500 monthly withdrawal from EPF’s Account 1 beginning January
The government will allow a monthly withdrawal of RM500 from Account 1 of the Employees’ Provident Fund (EPF) to assist those who have lost their jobs due to the Covid-19 pandemic, Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz announced today.
In his Budget 2021 speech, Tengku Zafrul said a withdrawal of up to RM6,000 for a period of 12 months is aimed at alleviating financial hardship faced amongst its 600,000 members.
“It is projected that the overall payment for the Account 1 withdrawal will involve RM4 billion. Eligible members can start applying from January 2021 onwards,” he said.
Account 1 consists of 70 per cent of workers’ contribution and is specifically meant for their retirement.
Earlier today, Tengku Zafrul also said the minimum employee EPF contribution rate will be reduced from 11 to 9 per cent for a period of 12 months beginning January 2021, with the move aimed at increasing take-home pay.
Tengku Zafrul’s latest announcement is in addition to an earlier announcement made in March where contributors can withdraw up to RM500 monthly for a period of 12 months from their Account 2 through EPF’s i-Lestari withdrawal facility.
The initiative, introduced in April, was meant to ease the financial burden of EPF members and help them meet their basic monthly financial needs during the Covid-19 pandemic.
“Taking into account both i-Lestari and this Account 1 withdrawal facility, the total allowed withdrawal will be up to RM12,000,” Tengku Zafrul added.
In addition, he also said EPF will allow members to withdraw from their Account 2 to purchase insurance and takaful products which are approved by EPF relating to life and critical illnesses coverage for themselves and their families.