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PETALING JAYA: Former Prime Minister Najib Razak said that increasing contribution rates and investing in more profitable projects will help the Employee Provident Fund (EPF) to recover its reserves if people are allowed to withdraw funds from their Account 1.
Disagreeing with reports that the potential withdrawals would seriously affect the economy and affect pensioners in the future, Najib said that allowing withdrawals from Account 1 would not mean that funds could not be replenished in the future.
“This can be done in two ways. Increase the monthly statutory contribution rate of employers and employees in the future when the economy recovers after the Covid-19 crisis,” he said on his Facebook page.
“These contribution rates are often lowered when the economy needs a shot.
“This was also implemented in February when the employee statutory contribution rate was lowered from 11% to 7%,” he said, adding that increasing the contribution rate when the pandemic subsides would allow people to restore their EPF savings.
He said the second method was for the government to generate more profit for EPF members through more lucrative projects.
Najib cited projects under his Barisan Nasional government such as Kwasa Damansara and the Battersea Power Station project in London as examples of such investments.
He said many “crony” real estate developers had protested when 2,800 acres of Malaysian Rubber Board land were sold to EPF for RM2.28 billion without a tender. However, EPF now had a project with a development value of RM50 billion, with the Kwasa Damansara project and two MRT stations built there.
Najib said that the collective amount that could be withdrawn from Account 1 would be RM45.7 billion if each of the 4.57 million contributors were allowed to withdraw RM10,000.
The total amount was equivalent to only 4.9% of the total assets of RM 929.64 billion of the EPF as of June 30 this year, it said.
Najib had previously suggested that the government allow withdrawals from Account 1. However, Prime Minister Muhyiddin Yassin said such withdrawals would lead to “bigger problems” later for EPF contributors.
The money in Account 1 is assumed to be used after retirement by EPF contributors. EPF members generally use Account 2 to reduce their home loan repayment and save on their interest. Others also depend on him for their tertiary education and medical needs.
However, in March this year, the government announced that some 12 million Malaysians will be allowed to withdraw RM500 per month from their EPF Account 2 over the next year, as part of measures to help the public cope with the financial impact. Covid- 19 restrictions.
