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‘I want to buy my children a good meal’: Some Malaysians relieved they can now dip into retirement funds, others pledge prudence

‘I want to buy my children a good meal’: Some Malaysians relieved they can now dip into retirement funds, others pledge prudence

The People's Housing Project around Malaysia is where many lower income families live. (File photo: Bernama)

KUALA LUMPUR: An empty savings account and a fistful of cash from pawned jewellery are the only assets left for a retail store assistant whose family has been hard hit 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 at Old Klang Road after the furniture shop was forced to shut due to poor business.

Being a mother of three young children, the 46-year-old shared that the recent announcement by the Employees Provident Fund (EPF) to allow its members to withdraw money prior to retirement, was a “godsend”.

“Without my husband’s job, it was just my income to sustain my family and three kids. I really don’t make much, so with rental and loan repayments for our motorcycle, we had to reach out to friends and family to make ends meet for some months,” she recounted. 

She added: “At the moment with the pawning of my jewellery and the initial withdrawal of RM4,000 (if the application is approved), I can comfortably pay back my debts and keep some to sustain us for the time being as my husband just got a job as a security guard in a nearby development.”

She 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 meant for retirement savings.

READ: BN's support for budget 2021 hinges on retirement fund withdrawal, loan moratorium extension says Najib

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. 

Amid the ongoing budget debate, members of parliament such as opposition leader Anwar Ibrahim and former prime minister Najib Razak urged the Ministry of Finance to allow the four million members of the retirement fund to access their account 1. 

While Mr Anwar urged only for the people to have access to their savings, Najib suggested that the allowed withdrawal amount should be upwards of RM10,000 (US$2444.79). 

Former Malaysian Prime Minister Najib Razak arrives at Kuala Lumpur High Court in Kuala Lumpur, Malaysia on Jul 28, 2020. (Photo: REUTERS/ Lim Huey Teng)

Subsequently, the provident fund made an announcement on Nov 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. 

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 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 account 1.

Those who qualify include those who have lost their jobs, given unpaid leave or lost a source of income as a result of the pandemic. 

While some Malaysians have welcomed the announcement and said they would apply to withdraw the funds to ease their financial burden, others said they would only take out what is necessary.


For drink stall owner Salleh Anak Ujong, being allowed to withdraw from EPF was the relief he has been waiting for. 

“Yes, the (earlier assistance) funds from the government were very helpful but as soon as I made the withdrawal, I used up the money to buy household items and settle all my debts. 

“(As for) the balance, I needed to use and buy the materials I needed to keep running my stall. Before I knew it, we ran out (of money) and we were back to square one, resorting to loaning money from someone else to help us get by,” said the 54-year old Kedahan. 

He added that COVID-19 has been a “vicious circle”, as it has been sapping to provide for his five children, his wife and a sister who lives with him. 

Salleh explained that he was the sole breadwinner of his household. His drink stall has been doing poorly as he previously banked on the two schools near his home for business. 

“Even when the schools reopened for a while, the students hardly came over,” he said. 

“It is not like last time when most parents were not sending their children to school. Even those who went to school did not want to lounge around and buy food and drinks from outside anymore.”

READ: Malaysian opposition will only support budget 2021 if it really helps the people: Anwar Ibrahim

Salleh intends to withdraw RM9,000 from his EPF, saved from his previous job as a maintenance worker in a mall. 

“I know it sounds selfish, but I want to buy my children a good meal, I want to maybe get them some Kentucky Fried Chicken or Pizza Hut.

“Before the business was down, 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 at an apartment in Kuala Lumpur, Malaysia on Nov 15, 2020. (Photo: Reuters/Lim Huey Teng)

Similarly, Wong Chon Tze, 46 who is an independent 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 hit so terribly because people are still giving birth and many still need confinement nannies. But because a lot of people fear COVID-19 infection, they rather opt for those who work for confinement centres as opposed to independent ones like myself.

“I still have my EPF savings from working as an assistant tailor last time. When my husband was around, he used to set aside some money and put it into my EPF. I know it’s not the ideal thing to do, I just want to take some of that money and put it into my bank account to feel like I am not poor anymore,” she said.

READ: Malaysia's budget for 2021 is its biggest ever. Will it cushion the impact of COVID-19?

In a statement released on Nov 16, EPF said that the i-Sinar facility made accessible to over 2 million account holders will cost the provident fund a total of RM14 billion.

Members who qualify can begin making applications from December and the approved amount will be deposited into their bank accounts in the month following the application. 

It added that members who wish to make a withdrawal should first consult a Retirement Advice Service Officer (RAS) to ensure the decision to withdraw was the best for their future. 

Malaysian Finance Minister Tengku Zafrul Tengku Abdul Aziz delivering the 2021 budget speech on November 6, 2020. (Photo: Malaysia Information Department)


Although they might be encountering dire economic circumstances, some said that they would probably only take what is needed and not the total sum allowed. 

Azmi Faiz, a factory manager turned burger seller told CNA that although his account balance of above RM90,000 allowed him to withdraw a significant amount, he will only take what is needed to buy himself a motorcycle.

“I had to sell my motorcycle in June because I had lost my job a month before and by that point our savings were stretched thin. 

“When I was a child, I used to help my uncle run a confectionary stall outside his house in our hometown in Hulu Selangor, so I decided I will open my own burger stall and I could do so with the money I got from selling my motorbike,” explained the 42-year old.

Azmi said he was initially very reluctant to withdraw his EPF savings but added that he had no choice. He said that it was not only inconvenient but unsafe to travel with his seven children on public transportation.

“In September, my last two kids both fell ill and we had no choice but to take a bus to the clinic. Some people in these buses don’t wear masks and it’s very alarming and stressful to take them like that,” he recounted.

He added: “I know I will however make the money back quickly to put it back (into EPF) as soon as possible, so it is going to be more like taking a loan from my retirement fund.” Azmi said he has been religiously contributing a small amount into his EPF account every month despite being self-employed.

People wearing protective face masks prepare for an interview during a hiring programme amid the COVID-19 outbreak in Kuala Lumpur, Malaysia, Sep 29, 2020. (Photo: Reuters/Lim Huey Teng) People wearing protective masks prepare for an interview during a hiring programme, amid the coronavirus disease (COVID-19) outbreak in Kuala Lumpur, Malaysia September 29, 2020. REUTERS/Lim Huey Teng

Rajeshwari also said that although her account eligibility allows her to withdraw up to RM9,000, she will not be taking 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 putting contributions into account 1 until we repay the withdrawn amount, so I rather take the minimum needed.” 

Rajeshwari was referring to the statement by EPF which said contributors applying for an advance from their account 1 under the i-Sinar facility will have to replace the amount with future contributions.

This replacement would be done, where 100 per cent of the new contributions would be first deposited into account 1 as opposed to the regular division of 70 per cent to account 1 and 30 per cent to account 2. 

READ: Mahathir reserves stand on budget 2021, says he is not confident that current plan will help pandemic

Sunway University's senior fellow and director of the economic studies programme Professor Yeah Kim Leng told CNA that households which do not need to make the withdrawal should be encouraged to avoid it.

"If they can and are able to get by with cash assistance and support from the government under the COVID-19 assistance packages, it would be better although it has become politically charged," he said.

He added that in cases where certain households had no choice but to tap on their retirement savings, then the situation could not be helped.

"There are households that are better off if they are able to withdraw especially if they are highly indebted or for emergency use. Under those circumstances which may not be that many, that (the withdrawal) would be beneficial especially if it would be able to avoid long term pain through extensive debt. 

"However, by and large, most Malaysian households are advised that it would be prudent not to withdraw," he said.

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Source: CNA/kd


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