KUALA LUMPUR: Malaysia's Ministry of Finance announced on Thursday (Nov 26) that more than 8 million members of the Employees Provident Fund (EPF) can now make withdrawals from their account 1 if their source of income has been affected by the COVID-19 pandemic.
The withdrawal limit has also been raised to RM10,000 (US$2,457), said Finance Minister Tengku Zafrul Tengku Abdul Aziz. Previously, the withdrawal was capped at RM9,000 for those with an account balance below RM90,000.
When wrapping up the policy stage debate on the 2021 budget in the parliament, Mr Tengku Zafrul said the scope of those allowed to withdraw through the i-Sinar programme has been widened to all members who have lost their jobs, given no-pay leave or have no other source of income.
“From 2 million members before this, i-Sinar is now accessible to over 8 million members.
“As long as their income has been affected significantly by the pandemic, they are allowed to withdraw their savings from account 1,” he said.
READ: ‘I want to buy my children a good meal’ - Some Malaysians relieved they can now dip into retirement funds, others pledge prudence
Withdrawal from the pension fund has been one of the key issues discussed by the Members of Parliament (MP) during the debate.
During the tabling of the budget on Nov 6, the finance minister had announced that the government would only allow those who have lost their jobs due to the pandemic to withdraw from their EPF account 1. The amount allowed was RM500 a month, with a total of up to RM6,000 in a year.
Former prime minister Najib Razak suggested that the allowed withdrawal amount should be upwards of RM10,000.
Subsequently, EPF announced on Nov 16 that those with an account balance below RM90,000 could withdraw up to RM9,000.
As for accounts with more than RM90,000 balance, account holders will be allowed to make a withdrawal of up to 10 per cent of their savings with the maximum amount capped at RM60,000.
Mr Tengku Zafrul said on Thursday that members can make an online application or go to any EPF offices nationwide and present proof of loss of job, no-pay leave notice, pay, allowance or overtime cut, or affected income for the self-employed.
Following a question by Pontian MP Ahmad Maslan on how much this effort would cost, the minister said RM70 billion.
He also reassured that given the RM960 billion in assets belonging to EPF and a yearly inflow of RM80 billion, this effort by the government would not affect the dividends for the members or the returns for EPF.
The budget was later passed at the policy stage through a voice vote.
The EPF, which is intended to sustain Malaysians post-retirement, had in the past only allowed early withdrawals under very strict conditions.
Prior to the pandemic, Malaysians who needed to withdraw money from their account before retirement could only do so from account 2 of their retirement savings for the purpose of buying or fixing a home, or for medical emergencies.
Until the retirement age of 60, account 1 was off limits to the account holders, functioning similarly to a fixed deposit account which received yearly dividends.