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PETALING JAYAAnyone, down to their last ringgit, may see some relief. However, this “instant gratification” can come at a high cost.
The government agreed to study the possibility of allowing contributors to the Employee Provident Fund (EPF) to withdraw their savings from Account 1.
If approved, this will be the first time any taxpayer will have early access to money that would otherwise be reserved solely for their golden years.
However, the move will also deplete your retirement funds.
In an interview with Bernama and local television stations on Tuesday, Prime Minister Tan Sri Muhyiddin Yassin said that he had discussed the matter with the Finance Ministry and that the government is now examining the proposal further.
Opinions on the proposal have been very contrasting. Worker representatives have expressed support for the idea, but companies have warned that it would be detrimental not only to the future of the individual EPF contributor, but also to the economic health of the country.
In a front page report yesterday, theSun highlighted the arguments for and against the proposal, as relayed by the Malaysian Trade Union Congress (MTUC) and the Malaysian SME Association.
MTUC President Datuk Abdul Halim Mansor said the opportunity to dip into their savings in Account 1 would give taxpayers a much-needed lifeline, as many of them are under severe financial strain as a result of the job losses and pay cuts caused by Covid-19. pandemic and subsequent economic consequences.
However, the president of the SME Association, Datuk Michael Kang, warned that it would be disastrous for taxpayers and for the country.
In the interview, Muhyiddin said the government would consider providing access to Account 1 for those who have been laid off, if they also meet “certain requirements.”
However, he also stressed that if there are already enough provisions in the 2021 Budget to help Malaysians who are under financial stress, then there would be no need to withdraw from Account 1.
Finance Minister Tengku Zafrul Abdul Aziz will present the 2021 budget for discussion at the Dewan Rakyat tomorrow at 3pm.
In April, the government relaxed the rules to allow taxpayers to withdraw up to RM500 a month from Account 2 of their EPF savings. Employees’ monthly contributions to their EPF savings were also reduced from 11% to 7% to give them extra cash on hand.
Another initiative was i-Lestari, which allowed withdrawing up to RM6,000 from the same account.
Muhyiddin said that about 70% of taxpayers have already chosen to reduce their contributions to 7%, leading to an increase in disposable income nationwide by almost 700 million RM.
He also expressed fears that taxpayers would not have enough savings left for their golden years if they were allowed to dip into Account 1.
“We will have to find a balance between meeting short-term needs and long-term financial security. We want to make sure you won’t jeopardize your retirement, ”he said.
On the proposal to extend the moratorium on loan repayments, he said the matter had been discussed with Bank Negara Malaysia and the Association of Malaysian Banks.
He said the government is now examining the proposal to determine the best way forward to help those in urgent need of support.
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