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The Covid-19 pandemic has caused tremendous damage to lives, livelihoods, and also the economy, which is now improving with the prospect of a return to a semblance of normalcy just around the corner with the imminent arrival of vaccines. against the virus.
But before any of that can happen, there is an urgent need to shore up the public’s finances, following several cash grants that were given at the start of the crisis.
With the government, through its various agencies, enduring so much financial and health strain to quell the debilitating effects of the pandemic, there is still a need to soften the liquidity needs of Malaysians as the country recovers from the pandemic and its consequences. economic effects.
Sticking with the 2021 Budget, one of the most controversial proposals was the relaxation for people to draw on their retirement funds to ease today’s cash requirements.
There was a lot of help during the early days of the pandemic to prop up finances and jobs, but more is needed as the economy is in recession, but starting to show improvements that are projected to see GDP grow by as much as 7.5% on next year.
The Employee Provident Fund (EPF) is the storehouse for many of people’s savings and has focused on providing short-term liquidity to members while balancing the primary need to ensure that members have enough money for their retirement. .
The EPF addresses issues and questions about the latest government-announced i-Sinar program and some of the lingering questions Malaysians have about the process of withdrawing urgently needed cash as they wonder about the future of their savings for the retirement.
Q: How did EPF come up with the i-Sinar mechanism and criteria? A: i-Sinar was formulated after extensive deliberation and consultation with key stakeholders from the public and private sectors, including the Ministry of Finance. The criteria and mechanism were determined with due consideration to balance the current needs of the members, as well as the mandate of the EPF to safeguard their retirement.
Q: Members are disillusioned with the existing conditions, which were labeled problematic and difficult. Comments
A: There are no conditions for the application of i-Sinar. What is described are the criteria to ensure that the application matches the internal data of the EPF, which will easily and securely streamline the approval process.
The verification process is necessary to prevent fraud and improper withdrawal of funds from i-Sinar by third parties.
For members who meet the criteria, your application will be automatically approved.
Only confirmation of the maximum amount is required during a member’s online application, and it’s not difficult.
Applications start on December 21, 2020.
Category 1 is for members who have no contribution for two (2) consecutive months after application, and internal EPF data is used to verify this. Therefore, no supporting documents are required during the application.
Category 2 is for members experiencing a reduction in income, and the EPF cannot confirm this without the supporting documents. The EPF can only detect a reduction in base salary (through contributions) but cannot detect a reduction in benefits, overtime pay, etc.
Because each member’s situation is unique, Category 2 provides an opportunity for the HBS to consider these situations based on its supporting documents. Members just need to apply online.
Q: Isn’t blanket / automatic approval possible for those who also applied for i-Lestari? Why?
A: The situation when EPF launched i-Lestari and i-Sinar is very different, the country was in a different situation compared to now. Economic activity basically stopped during those months (as of March). Now the economy is almost back to normal and most of the employees are back to work.
Even so, the EPF understands that the economic situation is different for current members depending on the sector or industry in which they are working, and i-Sinar will be available to help them.
Q: Some members did not experience a 30% reduction in income, but they do need cash to support their livelihood in this pandemic, especially those in the B40 / M40 category. Also, for those whose income is lower than what they previously obtained. Can they be considered?
A: There is still room for maneuver in Category 2 to consider requests from all members affected by Covid-19. If you have suffered a reduction in income or salary, and have the supporting documents to prove it, we recommend that you apply on January 11, 2021. The EPF will continue to consider your application.
This is to ensure that the door does not close and to provide an opportunity for as many members as possible to apply for i-Sinar, which is estimated at eight million people.
Q: Why was the six-month staggered payment established as a payment mechanism when members need their money quickly? Why can’t it be unique?
A: EPF wants to ensure that members receive assistance for as long as possible and understands that the first month is important for members to cover their responsibilities and beginning of the year expenses, such as schooling for children and the like.
As such, the tiered approach to payment is based on a few criteria:
– Data on the current liabilities of the members of the HBS;
– The need to extend the period of assistance due to the uncertainty of the Covid-19 pandemic; Y
– Balance the cash flow and current investments of the HBS.
As a reminder, the first payment will be up to RM5,000 (for those with Account 1 balance of RM100,000 and less) as we understand that more expenses are needed at the beginning of the year for school fees, etc.
It should be remembered that i-Sinar should be considered in a holistic context given the assistance of the Prihatin, Penjana and Kita Prihatin stimulus packages, which aim to reduce the burden of cash flow and responsibilities on individuals and households.
For example, the Bantuan Prihatin Nasional 2.0 (second phase) payment will be made in January 2021 and bank loan assistance such as a moratorium and reduced fees is also available to benefit members.
Q: Can the processing time be shortened as members are desperate? Is there an online application to reduce the number of people going to the branches?
A: For those in Category 1, the EPF has expedited the application process through automatic approval using internal data. It is estimated that they will receive their first payment in mid-January 2021.
For those in Category 2, the EPF estimates the processing time to be two to three weeks from the application date, to allow for document verification and case-by-case consideration. It is estimated that they will receive their first payment at the end of February.
Members must submit their application online.
Before applying, members must do the following:
1. Make sure your i-Akaun is active;
2. Make sure your phone number is up to date to receive the TAC number (at the EPF counter or kiosk);
3. Make sure your bank account number is active.
Q: What is the replacement method for i-Sinar? A: For i-Sinar members, all future contributions will be funneled into Account 1 until the withdrawn amount is replenished. Once the withdrawn amount is replenished, the contributions will return to the original ratio of 70:30 in Account 1 and Account 2.
Q: Can action be taken against employers who refuse to cooperate and facilitate i-Sinar application for their employees?
A: The EPF will ensure that action is taken against uncooperative employers, to ensure that i-Sinar requests from members are fluid.
Impact on retirement + investments of members
Q: What is the impact of i-Sinar on EPF’s financial health?
A: Guided by our Strategic Asset Allocation (SAA), our investments have proven resilient thus far despite the unique challenges the market faced during the economic downturn.
The EPF has always been diversifying its investments in national and global markets, keeping in mind its need for sufficient cash flow at all times, and this includes extreme times like the pandemic. Essentially, the EPF is a long-term investor, and every investment decision made will continue to take into account its responsibility to maintain member funds even in unprecedented situations like this pandemic.
At the moment and guided by the existing structure of i-Sinar, all the actions of the EPF will ensure that there is no impact on the domestic market.
Q: What is the impact of i-Sinar on the future retirement of members? What does EPF advise them?
A: While the EPF understands the need for members to withdraw their savings to survive these difficult times, we hope that members can plan in advance how much is needed to meet today’s needs and minimize the impact on their future retirement.
The EPF encourages members to seek out our Retirement Advisory Services (RAS) officers to help guide their finances and rebuild their retirement savings.
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