Withdrawing Your EPF  

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By Melissa Norman

On March 16 Prime Minister Datuk Seri Ismail Sabri Yaakob announced that the government decided to allow contributors of the Employees Provident Fund (EPF) to make a special withdrawal of RM10,000 to ease the burden of EPF members who are still impacted by the  Covid-19 pandemic.
According to EPF, the special withdrawal facility is open to all contributors aged below 55-years-old.
This facility is also open to non-citizens as well as  permanent residents who are EPF members and not just Malaysians.
Nevertheless, members must have at least  RM150 in their EPF account at the time of application. 
If members have previously applied for i-Lestari, i-Sinar, or i-Citra withdrawal initiatives, they can still enjoy this facility provided that they fulfil the requirements.
Reactions from policy makers, economists, and local financial experts have been mixed.
For EPF members who want to take out more money, this facility has come as a huge relief, easing their financial burdens.
For members who do not need the money and chose not to take out their retirement savings in the past two years, they are not batting an eyelid.

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Further, earlier fears that members had of large withdrawals affecting dividends, have been quashed,  thanks to the EPF’s 2021 stellar dividend rates of 6.1 percent for conventional savings, and  5.65 percent for shariah savings, both of which beat the 5.45 percent (conventional) and 5.0  percent (shariah) that were declared in pre-pandemic 2019.
The announcement of this facility was also welcomed by those who are not in a cash-tight  position but are planning to utilise their withdrawals for various reasons such as a higher return investment or kick start their own business.
However, EPF statistics in 2020 show that 70 percent of Malaysians outlive their retirement  savings, and those who withdrew their funds at age 55, use up their savings less than a decade  after retiring.
This was before the pandemic – before any of the special withdrawals were  allowed.

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Imagine the situation now, after almost four rounds of withdrawals.
A article by a local media demonstrated how much money an EPF member could potentially be losing out should they make the RM10,000 withdrawal, and it’s roughly RM37,500, due to the compounding interest.
Truth to be told is, it is extremely difficult to find something low risk like  the EPF that still gives you good annual returns, consistently.
While this withdrawal can help some people stay afloat longer, it is not a permanent fix.
From  raising the minimum wage, ensuring there are enough jobs in the market, and addressing the  rising prices of essential goods, there are other steps that can be done, which would be able  to better target the root of the matter. 

About the author: Melissa Norman (pictured above) is the founder and managing director of Aisling Group. This is an opinion column. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of this publication.

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