KUALA LUMPUR, Nov 27 ― PKR MP Wong Chen has today warned the government against going ahead with increasing Employees’ Provident Fund (EPF) withdrawal to RM10,000 citing possibilities of landing the statutory body in a “difficult financial situation” in the future.
The Subang MP said in light of the Covid-19 pandemic, the government should anticipate lesser contribution from depositors instead of the RM80 billion as projected by the finance minister yesterday in his winding-up speech in Parliament.
“I am assuming that not every eight million depositor has RM10,000 to withdraw, hence the RM70 billion number.
“If this is indeed his plan, then what he proposed yesterday to Parliament is very worrying,” Wong wrote on his Facebook page.
During the minister's winding-up speech, Wong had appealed to the minister to change his mind from making an irresponsible decision.
“I said that, by my calculations, the net inflow of EPF for 2021 is RM20 billion. [But] he replied that inflow was RM80 billion and that EPF has assets of RM960 billion.
“His argument is flawed but despite my requests to debate more, he proceeded to wind up his speech,” he wrote.
In a simple calculation the MP provided, he said net inflow for 2021 would only amount to RM20 billion and not RM80 billion ― RM70 billion (deposits) minus RM50 billion (withdrawals) which equals to RM20 billion.
He also made a projection for 2021, where assuming depositors will contribute less than 2019, due to the fact that unemployment is up and pay cuts will continue to happen. Thus the estimation for 2021 sees the EPF contribution to fall to RM70 billion.
“In 2019 (pre-Covid-19) contributors deposited RM76 billion into EPF. For 2019, the contributors also withdrew RM45 billion. Remember that these are 2019 numbers, pre Covid-19.
“As for withdrawals for 2021, again due to Covid-19, there will be more pressure than the normal withdrawals, which is why I estimate the 2021 withdrawals to be higher at RM50 billion,” he said.
Even with the benefit of doubt, Wong said the finance minister's projections of inflow are higher than 2019.
He also argued that EPF for 2021, will need to raise additional funds of RM50 billion ― RM70 billion (Covid-19 withdrawals) minus RM20 billion (net inflow).
In addition to the above burden, Wong said the federal deficit is expected to be RM85 billion in 2021.
At the same time he said EPF will have to find RM21 billion to buy 25 per cent of the sukuks and bonds and RM50 billion Covid-19 withdrawals ― that is a whopping RM71 billion financial burden.
“Where is EPF going to find an additional RM71 billion next year? What assets and shares are they gonna have to sell?” he asked.
Wong therefore urged the finance minister to clarify and change his plans (regarding the Covid-19 withdrawals), otherwise risk causing negative market implications and will put unnecessary strain on the sustainability of EPF to pay the targeted annual 6 per cent dividend.
“Allowing the most desperate two million depositors from the bottom 40 and middle 40 to withdraw their pensions is acceptable as a policy, but to allow a floodgate of withdrawals to eight million depositors, rich and poor, is just grossly irresponsible,” he said.
The increase in EPF withdrawals up to RM10,000 was one of the conditions set by Umno MPs, in exchange for their support of the Budget 2021.
The Umno MPs also said that they would only support the Perikatan Nasional Budget if a blanket moratorium was promised and be included in amendments to the Bill.
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