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PETALING JAYA: The decision to allow withdrawals from the Employee Provident Fund (EPF) from Account 1 raises concerns about the financial security of members and their families, says the Institute for Democracy and Economic Affairs (Ideas).
In a statement on Saturday (Nov 7), the think tank said that around 70% of EPF members aged 55-60 opted for lump sum withdrawals upon retirement, and half of them used up their savings in just five years.
“While the withdrawals can help maintain your livelihood in the short term, we still strongly caution against implementing this measure out of consideration for long-term financial security,” he said.
Introducing the 2021 Budget on Friday, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz announced that members of the Employee Provident Fund (EPF) could withdraw up to RM500 per month from their Account 1 for 12 months for a total 6000 RM.
He said it was expected to ease the financial burden on some 600,000 affected members.
Ideas, however, acknowledged that the government had made budget allocations to protect vulnerable groups through various financial assistance programs, as well as to support mental health and the prevention of violence and substance abuse.
On supporting small and medium-sized enterprises (SMEs), he said that while there were allocations to drive digitization, the budget lacked a clear political direction to build the resilience of SMEs.
Measures to support the most vulnerable companies were justified, but a greater focus on adapting to the new rule is needed, he said.
Ideas also said that sustainability measures did not match the scale of the challenge, and said Malaysia needed bold action to reduce its dependence on fossil fuels and reduce emissions, as well as to integrate sustainability into the economy.
He said that the key measures presented in the 2021 Budget were balanced in their coverage of vulnerable segments of the population, the economy and business activities.
However, there was no clear political direction for the country’s development after the pandemic, he added.
While he welcomed the budget’s goal of fighting health and economic crises, he cautioned that the government’s revenue projection was optimistic.
Ideas said it was based on the assumption that the pandemic and economic conditions would experience a rapid recovery in 2021, which was not certain.
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