KUALA LUMPUR, 6 November 2020: The Employees Provident Fund (EPF) takes note of the Budget 2021 announcement which provides a well thought-out, people-centric and holistic approach to managing the current situation surrounding the COVID-19 pandemic and its impact on the country’s economy, healthcare, and long-term sustainability.
The Budget reflects the Government’s responsiveness to the people’s plight during this difficult period and is at the same time, well-balanced to support people’s livelihoods while also driving economic growth. The EPF is pleased that the Government has taken into consideration a number of suggestions that it has made, especially in addressing social protection issues that have been raised over the years.
Chief EPF Officer Alizakri Alias said, “The COVID-19 pandemic has presented us with unforeseen and severe challenges, especially with regards to loss of employment and source of income. Earlier this year, the EPF had responded swiftly to our members’ plight by introducing the i-Lestari Withdrawal facility, with the hope that it will ease some of their cash flow problems. We also allowed members to voluntarily reduce their share of EPF contribution to seven (7) per cent from 11 per cent for the April 2020 to December 2020 period. Furthermore, we extended assistance to affected employers by introducing the Employer COVID-19 Assistance Programme (e-CAP), which allows eligible SMEs the flexibility to apply for a deferment or restructuring of the employer’s share of EPF contributions.”
“However, with the new wave of COVID-19 cases making an economic recovery uncertain, some of our members are falling back into financial hardship once more. We are concerned that the existing assistance may not last long enough for those in need of more cash to support themselves and their families.”
“Allowing members access to their EPF retirement savings other than what is provided for under the EPF Act 1991 is unprecedented and has never been done before. Account 1 (70% of savings) has always been designated for retirement while Account 2 (30% of savings) is meant for discretionary withdrawals. Given the complexity of the situation, it was not an easy decision that could be made in a hurry. However, we found a middle ground to allow members access to their savings without jeopardising their future retirement.”
The additional withdrawal facility is very specific and targeted to members who really need the cash relief. This will be a short-term and once-in-a-lifetime facility providing some measure of relief for the most vulnerable and unprotected groups, while maintaining the EPF’s mandate to safeguard members’ retirement savings. While the EPF is aiming to allow for the application for the additional targeted withdrawal facility to proceed in January 2021, further details on this will be announced by 11 November 2020.
The EPF is also looking at allowing members to withdraw from their Account 2 to purchase insurance and takaful products covering life/family and critical illness from approved insurance and takaful operators. The products, which will be offered through i-Akaun, will be customised for EPF members at affordable premiums and comes with additional features.
In addition to this, the EPF also welcomes the Government’s decision on the reduced minimum statutory contribution rate for employees to nine (9) per cent, beginning January 2021 to December 2021, which takes into consideration the depressed economic condition as well as our members’ reduced income.
“The COVID-19 pandemic is still here and we have to live with it for the next few years. We hope that the extra money in our members’ pocket will increase their disposable income and spur domestic consumption.”
“Further to the announcement made by the Minister of Finance, Tengku Datuk Seri Zafrul Tengku Abdul Aziz, during the Budget 2021 announcement today, we are also grateful to the Ministry of Finance for their view on the matter as well as their understanding on the severity of the current situation that is affecting a large portion of Malaysians, by allowing the additional assistance,” Alizakri noted.
The EPF wishes to point out that while these measures are the response to members’ immediate concerns and covers the short-term gaps during this unprecedented health and economic crisis, there must be steps taken to urgently address the shortcomings in the country’s social protection system, which this pandemic has revealed to be inadequate in addressing the social well-being of Malaysians.
“Given that EPF represents almost 50% of the Malaysian population with a total of 14.6 million members, we will take a very active stance on giving our views and assisting the Government in creating a holistic solution to achieving social well-being for our members in particular, and Malaysians at large. We will be active in championing social protection together with other agencies and bodies through MySPC (Malaysia Social Protection Council) and will seek to enhance the social protection system for the future of Malaysians,” Alizakri added.
The EPF will also bolster our outreach programmes to empower and equip our members with financial knowledge that they may be able to face future financial challenges while also assisting them in upskilling themselves. We urge members to make an appointment with our Retirement Advisory Service (RAS) officers to help plan their finances effectively and seek advice on the solutions available.
Issued by the EPF Media Desk Corporate Affairs Department 6 November 2020
About the Employees Provident Fund (EPF)
The Employees Provident Fund (“EPF”) is one of the oldest retirement funds in the world. Established in 1951, the EPF is a social-security organisation focused on safeguarding member savings and delivering excellent services. In recent years, in line with its vision of helping members achieve a better future, the EPF has expanded its role to encompass the creation of a comprehensive social well-being ecosystem. Today, the EPF remains steadfast in its commitment to members through consistent efforts to update and improve itself, in order to build the foundation for sustainable, holistic and equitable well-being for all Malaysians