PETALING JAYA: The Employees Provident Fund (EPF) has warned against further withdrawals of EPF savings under the i-Citra scheme, stating that it could lead to an “erosion of trust” in the pension fund.
Until October, EPF members had withdrawn a total of RM101 billion through schemes such as i-Citra to tide them over during the various lockdowns and the subsequent economic slowdown.
Describing last year’s i-Lestari and i-Sinar withdrawals and July’s i-Citra withdrawal as “exceptional in nature”, EPF stressed that as a trustee, it has a fiduciary duty to uphold the equitable interest of all its members.
“… more so when there are still millions of members who maintain their savings untouched and hope for better returns that would see them through their golden years,” it said in a statement.
“Currently, there are more than RM270 billion in EPF savings that can be withdrawn at any time by EPF members who have reached the age of 55 or 60, or those who have more than RM1 million in their EPF account.
“It is feared that such erosion of trust towards the EPF may force these members to withdraw their money en masse, causing a negative impact on the country’s markets as EPF is a major pillar in the holding of capital market and financial investment assets in the country.”
The pension fund said that using EPF savings for emergency needs will lead to severe consequences. Members would have little savings for their retirement years and this could be compounded by other uncertainties such as rising healthcare costs.
It pointed out that the withdrawals have led to 6.1 million members now having less than RM10,000 in their EPF accounts. Of that number, 3.6 million members have less than RM1,000.
Bumiputeras made up 78% of the withdrawal applicants. As a result, 4.4 million – or 54% of Bumiputera members – now have less than RM10,000. In addition, two million – or 25% of Bumiputera members – have less than RM1,000.
Umno president Ahmad Zahid Hamidi has been among those who have recently urged the government to allow further withdrawals to help those still reeling from the economic effects of Covid-19.
Other political leaders have also made calls to allow recent flood victims to withdraw their money under the i-Citra scheme to get themselves back on their feet.
However, Prime Minister Ismail Sabri Yaakob has poured cold water on such suggestions. He said the government was already offering many forms of financial aid to individuals and businesses to recover from the floods.