PUTRAJAYA – The government is considering allowing certain Employees’ Provident Fund (EPF) contributors such as laid-off workers to withdraw funds from Account 1.
"The Finance Ministry and I are prepared to study the proposal for contributors who really need to withdraw allocations from Account 1," said Prime Minister Tan Sri Muhyiddin Yassin today in an interview ahead of Budget 2021’s tabling on Friday.
The government had already relaxed regulations earlier this year, reducing the workers’ contribution rate from 11% to 7%, and allowing i-Lestari withdrawals from Account 2 of RM6,000 per contributor.
Muhyiddin said almost 70% of EPF members had opted to reduce their workers’ contribution rate to 7%, raising disposable income to close to RM700 million per month.
He said however that drawing from EPF savings may not necessarily address their cash flow problems, as more than 30% of EPF members have savings of less than RM5,000 in their accounts.
"Some have contributions of less than RM1,000. Drawing from EPF savings will not necessarily address their cash flow problems," said Muhyiddin.
Account 1 consists of 70% of the workers’ contribution and is specifically for retirement.
"However, the government is always ready to study the proposal to help those facing difficulties who truly need (the funds)," he said.
Muhyiddin said a responsible government must balance the short-term needs of the affected individuals with their long-term needs and the requirements of retirement savings.
On the call by several parties to extend the loan repayment moratorium, Muhyiddin said the government had discussed it with Bank Negara Malaysia and the Association of Banks in Malaysia, and would look into how to facilitate extensions for those in dire need. – Bernama, November 4, 2020
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