EPF: No Provision On Withdrawals For Natural Disasters

With regards to calls from the public to allow flood victims to withdraw savings from iCitra, the Employees Provident Fund states that there is no provision in the EPF Act that allows the withdrawal for natural disasters.

In a statement released, it informed that the organisation is subject to the EPF Act 1991, which stipulates Account 1 or 70 percent of savings is set aside for retirement, while Account 2 (30 percent of savings) for other permitted withdrawals this is to ensure their retirement is secure. “EPF reaffirms its commitment to help members rebuild the adequacy of their retirement savings and supports the cessation of any special withdrawals under the i-Citra scheme so that their retirement will not be compromised,” the organisation said. It explained that the i-Lestari and i-Sinar withdrawal schemes, followed by iCitra last July, were unusual as the initiative was introduced to meet urgent cash needed during the Movement Control Order amidst the economic slowdown.

It added that the withdrawal scheme resulted in 6.1 million members now having less than RM10,000 in their EPF accounts, of which 3.6 million have less than RM1,000. “The worrying level cannot guarantee the retirement of members of which the majority of those who have made the emergency withdrawals are bumiputeras. As a result of the withdrawal, 4.4 million or 54 percent of bumiputera members now have less than RM10,000, and 2.0 million or 25 percent have less than RM1,000″ the body added.

In addition, EPF states that further disbursement will affect its position as a retirement savings organisation, and as trustee of future members saving it has a fiduciary duty to look after the fair interests of all its members.

To date, there are more than RM270 billion in EPF savings that can be withdrawn at any time by members who have reached the age of more than 55 and 60, as well as those who have savings of more than RM1 million in their EPF accounts.

It is feared that the decline in trust in the EPF will force these members to withdraw their savings in large quantities and have a negative impact on the domestic market as the ‘institution’ is a major pillar in holding capital and financial market investment assets in the country. It also emphasised that the current focus is to continue
to protect members’ savings, in line with its mandate, and to ensure that members also recover and rebuild their retirement savings for a comfortable retirement.

On the plight of the flood victims, EPF states that through GLIC/GLC Disaster Response Network (GDRN), an allocation of RM10 million has been channeled from its savings on operating expenses. The assistance, it said, would be channeled through donations in the form of essential goods.

Previous articleProperty Auction Platform, Bidnow Raises RM5.5 Million on MyStartr
Next articleSMS Authentication Is No Longer Relevant, Says Expert

LEAVE A REPLY

Please enter your comment!
Please enter your name here