KUALA LUMPUR – The appeal by former prime minister Datuk Seri Najib Razak and Umno’s suggestion for a one-off RM10,000 withdrawal under the i-Citra scheme from the Employees Provident Fund (EPF) are “populist” and “misguided” moves, said Klang MP Charles Santiago.
The DAP lawmaker, in a statement today, said withdrawing from the retirement fund is destructive in the long run, as it creates old-age poverty and financial vulnerability.
“EPF revealed that 6.1 million members now have less than RM10,000 in their EPF accounts, with 3.6 million having less than RM1,000, leaving them vulnerable and unprotected after their retirement.
“48% of EPF members below age 55 have critically low savings.
“About 85% of EPF contributors will face the risk of old-age poverty, and they would have to extend their work life by extra four and six years to rebuild savings that were utilised during the pandemic,” he said.
Santiago stressed that this group of contributors will not benefit from future dividend and compounding interest.
In addition, he said this will further widen the gap between the rich and poor and undermine the government’s efforts in eradicating national poverty.
Santiago pointed out that the government needs to step in to alleviate the people’s hardship following the impact from the Covid-19 pandemic and the recent floods.
The government, he said, should not leave the people to fork out their retirement savings in order to rebuild their homes and get their lives together.
As such, the only viable alternative is to establish a robust social protection system instead of opting to further impoverish the poor by transforming EPF savings, a retirement fund, into an emergency relief fund.
“The ongoing campaign by Umno leaders, together with their NGO affiliates for further withdrawal of individual retirement funds, would only be a disservice. In fact, they would only end up deceiving the very people they claim to help,” he added.
On September 15, Najib suggested that the government should increase the i-Citra maximum withdrawal limit from RM5,000 to RM10,000, provided that the government undertakes serious efforts to boost EPF’s assets by giving more business opportunities to EPF-owned companies.
During the debate session on the motion of thanks on the royal address by the Yang di-Pertuan Agong in Parliament, the Pekan MP also proposed the introduction of the i-Survive soft loan scheme for B40 and M40 borrowers, with a three-year repayment period and a low maximum interest rate of 3%.
On November 1, the former Umno president had once again urged the government to increase the maximum withdrawal of the i-Citra fund to RM10,000.
In making the call, he said the proposal is not a populist move, but stemmed from the urgent need of the people post-Covid-19 pandemic.
On December 14, Umno president Datuk Seri Ahmad Zahid Hamidi echoed Najib’s calls for the government to allow further withdrawals from EPF in order to help those still suffering from the economic effects of Covid-19.
In response, EPF issued a statement on December 28 to warn that any erosion of trust towards the agency might cause a massive withdrawal that will negatively impact capital markets in the country.
This was after noting that more than RM270 billion in savings can be withdrawn at any time by its members who have reached above the age 55 or 60, or those who have more than RM1 million in their account.
The retirement fund expressed concern that further withdrawals from the fund to help soften the impact of Covid-19 and recent natural disasters would “erode its position as a provident fund and trustee of its members’ retirement future”.
EPF said “such erosion of trust towards the agency might force these members to withdraw en masse, thus causing negative impact to the country’s markets as the EPF is a major pillar in the holding of capital market and financial investment assets in the country.”
“The unprecedented scale and impact of the Covid-19 pandemic and recent natural disasters have pushed the country’s current social protection to its limits.
“The approach of using EPF savings for emergency needs will certainly cause a severe impact, as members will face very low savings in their retirement years, compounded by other uncertainties such as rising healthcare costs,” it said in a statement. – The Vibes, January 12, 2022
