EPF: More than 3 million contributors yet to rebuild their savings after special withdrawals
KUALA LUMPUR, May 19 — About 3.1 million contributors who made withdrawals via the four withdrawal schemes of the Employees' Provident Fund (EPF) have not been able to rebuild their respective savings, revealed EPF.
EPF said that the amount is equivalent to 39 per cent of the total of 8.1 million EPF members who make withdrawals with their current savings rate is only around RM890, Utusan Malaysia reported.
Of the 8.1 million members making withdrawals, EPF said that 0.3 million (four per cent) have reached the age of 55 and above, which qualifies them to make full withdrawals of all their savings.
A total of 4.6 million contributors or 59 per cent have started to rebuild their savings with net savings growth amounting to RM26.1 billion within eight months of making withdrawals.
However, EPF said that the percentage of its members who will reach a basic savings amount of RM240,000 at the age of 55 dropped drastically, from 36 per cent in 2020 to only 29 per cent at the end of 2022.
Universiti Keusahawanan Koperasi Malaysia (UKKM) senior lecturer Prof. Associate Dr Abu Sofian Yaacob said that the figure shows that almost five million EPF members are able to rebuild their savings but many are still struggling to make contributions after a year of making withdrawals.
Abu Sofian said this situation makes the insistence on special withdrawal for the fifth time impractical, on the contrary, he added that it will only worsen the situation especially for EPF members who are significantly short of money in their respective savings.
“Those who previously took out savings could only make monthly contributions at a small rate. They also may not have a regular income, job and were laid off or just gotten into a new job.
“For them, the effort to rebuild the savings will be quite difficult and will take a long time,” he was quoted as saying.
Abu Sofian also said that this situation shows that EPF members cannot rely too much on special withdrawals, instead they need to find other ways to face the rising cost of living.
“They can start a small business, can do part-time work or venture into a new field, at least it will boost their income. So, there are many other ways to earn income and cover living expenses, you can't just rely on the EPF,” he was quoted as saying.
Yesterday, Utusan Malaysia reported that EPF disagreed that there is a need to allow Malaysians a fifth round of special early withdrawal from their retirement savings this year, as there is no emergency situation now unlike during the earlier days of the Covid-19 pandemic.
EPF chief strategy officer Nurhisham Hussein said its studies found that only withdrawals made during the first to third rounds under i-Lestari, i-Sinar and i-Citra were genuinely for contributors' daily needs such as the purchase of food and goods as well as to pay debts.
However, Nurhisham revealed that the fourth Special Expenditure allowed on Hari Raya Aidilfitri last year, amounting to more than RM40 billion, was mostly used for investments including buying gold and emergency savings.
The matter was also supported by the Congress of Employees in the Public Service (Cuepacs), the Malaysian Trade Union Congress (MTUC) and the Malaysian Employers' Federation (MEF).
MTUC president Mohd Effendy Abdul Ghani said that the fifth special withdrawal is not appropriate if a total of 6.7 million contributors under the age of 55 still have less than RM10,000 in savings to avoid financial burdens during retirement.
While MEF president Datuk Syed Hussain Syed Husman said that he is worried about workers who have to work for another four to six years just to cover the amount they spend and expects only three percent of Malaysians to be able to retire comfortably.
Whilst Cuepacs president Adnan Mat said more people will retire with low savings if further EPF withdrawals were allowed.