THOSE who have lost jobs must think hard before using their retirement savings to survive economic hardship caused by Covid-19 pandemic, the Malaysian Employers’ Federation (MEF) said.

MEF executive director Shamsuddin Bardan said only those in dire straits should do so, as the move will jeopardise their future savings for their senior years.

He was commenting on the proposal in Budget 2021 today to allow those who have lost jobs to to withdraw up to RM500 a month, for 12 months, from their Employees’ Provident Fund (EPF) Account 1.

“The offer is made for those who have cash flow problems and to help them under these terrible circumstances.

“The government is not forcing them to withdraw and they can choose to take the money out. 

“Be wise when making the decision. If there is no urgency, it is better not take the money out,” Shamsuddin told The Malaysian Insight.

Finance Minister Tengku Zafrul Tengku Abdul Aziz, when tabling the budget today, said that withdrawals from Account 1 can start in January, to a maximum of RM6,000 for a year.

The proposal to let those financially challenged because of the pandemic draw from retirement savings was proposed recently, including by Umno Youth and former prime minister Najib Razak.

It drew disapproval from EPF chief executive officer Alizakri Alias.

Meanwhile, Shamsuddin also agreed with another proposal in the budget to reduce employees’ share of EPF contributions so as to increase take-home pay.

Tengku Zafrul announced that workers’ contribution to the fund will be reduced from 11% to 9% starting January 2021 for 12 months. – November 6, 2020.