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KUALA LUMPUR: An empty savings account and a handful of cash from pawned jewelry are the only assets left for a retail store attendant whose family has been hit hard by the COVID-19 pandemic.
S Rajeshwari, who works at a retail store in Lebuh Ampang, told CNA that her husband had lost his job as a carpenter on Old Klang Road after the furniture store was forced to close due to bad business.
As a mother of three young children, the 46-year-old shared that the recent announcement by the Employee Provident Fund (EPF) to allow its members to withdraw money before retirement was a “godsend.”
“Without my husband’s job, it was just my income to support my family and my three children. I don’t really earn much, so with our motorcycle rental and loan payments, we had to reach out to friends and family to make ends meet for a few months, ”he said.
She added: “Right now, with my jewelry pawn and the initial withdrawal of RM4,000 (if the application is approved), I can comfortably pay off my debts and keep some to support ourselves for the time being, as my husband has just got a job as a security guard in a nearby development. “
He was referring to an announcement made by the retirement fund body earlier this month, which allowed qualified Malaysians to make a withdrawal from their account 1 intended for retirement savings.
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In the past, the EPF, which is intended to support Malaysians after retirement, only allowed early withdrawals under very strict conditions.
Before the pandemic, Malaysians who needed to withdraw money from their account prior to retirement could only do so from Account 2 of their retirement savings for the purpose of buying or fixing a house or for medical emergencies.
Until the retirement age of 60, Account 1 was off-limits to account holders, functioning in a similar way to a fixed deposit account that received annual dividends.
Amid the ongoing budget debate, members of parliament such as opposition leader Anwar Ibrahim and former prime minister Najib Razak urged the Finance Ministry to allow the four million members of the retirement fund to access their account 1.
While Mr. Anwar urged that only people have access to their savings, Najib suggested that the allowable withdrawal amount should be greater than RM10,000 (US $ 2444.79).
Former Malaysian Prime Minister Najib Razak arrives at the Kuala Lumpur High Court in Kuala Lumpur, Malaysia on July 28, 2020 (Photo: REUTERS / Lim Huey Teng)
Subsequently, the provident fund made an announcement on November 16 that those with an account balance below RM90,000 could withdraw up to RM9,000 with an initial withdrawal of up to RM4,000 and the balance over a period of six months.
For accounts with a balance over RM90,000, account holders will be able to make a withdrawal of up to 10 percent of their savings with a maximum of RM60,000 and an initial withdrawal of up to RM10,000.
This meant that 2 million account holders would have access to their EPF 1 account.
Those who qualify include those who lost their jobs, received unpaid leave or lost a source of income as a result of the pandemic.
While some Malaysians welcomed the announcement and said they would request to withdraw the funds to ease their financial burden, others said they would only take out what is necessary.
“I WANT TO BUY MY CHILDREN A GOOD FOOD”
For the owner of a beverage stand, Salleh Anak Ujong, being allowed to withdraw from EPF was the relief he was waiting for.
“Yes, the government (past assistance) funds were very helpful, but as soon as I made the withdrawal, I used the money to buy household items and pay off all my debts.
“(Regarding) the balance, I needed to use and buy the materials I needed to continue operating at my position. Before I knew it, we ran out (of money) and were back where we started, resorting to borrowing someone else’s money to help us get by, ”said Kedahan, 54.
He added that COVID-19 has been a “vicious circle”, since it has been undermining the livelihood of his five children, his wife and a sister who lives with him.
Salleh explained that he was the sole breadwinner in their household. His beverage stand has been malfunctioning, as he previously relied on the two schools near his home to do business.
“Even when the schools reopened for a while, the students barely came,” he said.
“It’s not like the last time most parents didn’t send their kids to school. Even those who went to school no longer wanted to hang around and buy food and drinks from outside. “
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Salleh intends to withdraw RM9,000 from his EPF, saved from his previous job as a maintenance worker at a shopping center.
“I know it sounds selfish, but I want to buy my kids a good meal, maybe I want to buy them Kentucky Fried Chicken or Pizza Hut.
“Before business fell, it was a monthly affair, if not once every two weeks. Now it’s been months since they had it and I just want to make them happy, ”he said.
Workers spray disinfectant in an apartment in Kuala Lumpur, Malaysia, on November 15, 2020 (Photo: Reuters / Lim Huey Teng)
Similarly, Wong Chon Tze, 46, who is a freelance confinement nanny, told CNA that she just wanted to take at least a fraction of her withdrawn money and give it to her two children to spend.
“I’ll be honest, my business hasn’t been affected that much because people are still giving birth and many still need confinement babysitters. But because many people fear COVID-19 infection, they prefer to opt for those who work in confinement centers rather than freelancers like me.
“I still have my EPF savings from working as an assistant tailor last time. When my husband was around, he used to put some money aside and put it in my EPF. I know it is not ideal, I just want to take part of that money and put it in my bank account to feel that I am no longer poor, “he said.
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In a statement issued on November 16, EPF said that the i-Sinar facility accessible to more than 2 million account holders will cost the provident fund a total of RM14 billion.
Qualifying members can begin applying in December and the approved amount will be deposited into their bank accounts in the month following the application.
He added that members who want to make a retirement should first consult with a Retirement Advisory Service (RAS) Officer to make sure the decision to retire is the best one for their future.
Malaysian Finance Minister Tengku Zafrul Tengku Abdul Aziz delivered the 2021 budget speech on November 6, 2020 (Photo: Malaysia Department of Information).
REMOVING THE MINIMUM NUDE
Although they could be facing dire economic circumstances, some said they would likely only take what they need and not the full amount allowed.
Azmi Faiz, a factory manager turned hamburger vendor, told CNA that although his account balance of more than RM90,000 allowed him to withdraw a significant amount, he will only take what he needs to buy a motorcycle.
“I had to sell my motorcycle in June because I had lost my job a month earlier and at that point our savings were exhausted.
“When I was a kid, I used to help my uncle run a confectionery stand outside his home in our hometown on Hulu Selangor, so I decided to open my own burger stand and I could do it with the money I made selling my motorcycle.” explained the 42-year-old.
Azmi said he was initially very reluctant to withdraw his savings from EPF, but added that he had no other choice. She said it was not only inconvenient but dangerous to travel with her seven children on public transport.
“In September my last two children fell ill and we had no choice but to take a bus to the clinic. Some people on these buses do not wear masks and it is very alarming and stressful to wear them like this, ”he said.
He added: “However, I know that I will get the money back quickly to pay it back (in EPF) as soon as possible, so it will be more like borrowing from my retirement fund.” Azmi said that she has been religiously contributing a small amount to her EPF account every month despite being self-employed.
People wearing protective masks prepare for an interview during a recruitment program amid the COVID-19 outbreak in Kuala Lumpur, Malaysia, on September 29, 2020 (Photo: Reuters / Lim Huey Teng).
Rajeshwari also said that although his account eligibility allows him to withdraw up to RM9,000, he will not take the maximum amount.
“For people like us, having access to our account 2 is important and my brother-in-law told me that the government will continue to put the contributions into account 1 until we repay the amount withdrawn, so I prefer to take the minimum necessary.”
Rajeshwari was referring to EPF’s statement that taxpayers requesting an advance from their account 1 under the i-Sinar service will have to replace the amount with future contributions.
This substitution would be made, where 100% of the new contributions would be deposited first in account 1 instead of the regular division of 70% in account 1 and 30% in account 2.
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Professor Yeah Kim Leng, principal investigator at Sunway University and director of the economic studies program, told CNA that households that do not need to withdraw should be encouraged to avoid it.
“If they can and can get by with cash assistance and government support under COVID-19 assistance packages, it would be better, even though it has become politically charged,” he said.
He added that in cases where certain households had no choice but to use their savings for retirement, the situation could not be remedied.
“There are households that are better off if they can retire, especially if they are heavily in debt or for emergency use. In those circumstances, which may not be that many, that (withdrawal) would be beneficial, especially if it could Avoid long-term pain through extensive debt.
“However, in general, the majority of Malaysian households are advised that it would be prudent not to withdraw,” he said.
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