IT makes better sense for Putrajaya to provide financial assistance to the people instead of asking them to dip into their Employees’ Provident Fund (EPF) savings, said an economist.

DM Analytics managing director Dr Muhammed Abdul Khalid said it is alarming and irresponsible for the government to ask the people to dip into own limited savings under the current climate.

“That savings are for old age. Instead of providing cash assistance, the government is asking the rakyat to use their own savings.

“About two in 10 contributors have less than RM6,000 in EPF and 50% has an average savings of only RM12,000,” Muhammed told The Malaysian Insight.

EPF funds are for retirement and if people started withdrawing now, they would have no savings once they retire.

“What is also worrying is that nearly half of Malaysian workers do not have EPF, what would happen to them?”

During the Budget 2021 announcement last Friday, Putrajaya said it will allow a monthly withdrawal of RM500 from Account 1 to assist those who have lost their jobs because of the Covid-19 pandemic.

Finance Minister Tengku Zafrul Tengku Abdul Aziz said the withdrawal of up to RM6,000 for 12 months is aimed at alleviating financial hardship faced among its 600,000 members.

It is projected that the overall payment for the Account 1 withdrawal will involve RM4 billion and eligible members can start applying from January 2021 onwards.

Umno and opposition leader Anwar Ibrahim, however, have urged the government to reconsider increasing the EPF withdrawal limit to RM10,000.

They said increasing the withdrawal limit would ease the burdens of families facing financial difficulties.

They have also asked the government to reconsider extending the loan moratorium, which ended in September.

Account 1 consists of 70% of workers’ contribution and is specifically for their retirement.

However, based on a recent Unicef survey Families On The Edge 2, Muhammed, who led the research, said about 45% of those from low-income families currently do not have an account with EPF or Socso (Social Security Organisation).

EPF chief executive officer Tunku Alizakri Alias vowed not to make a reckless decision over Account 1 withdrawal and is still discussing this with the Finance Ministry.

Tunku Alizakri said EPF would not mortgage the future of its members by making reckless decisions or be influenced on this issue.

Despite facing various pressures, including from politicians who support the withdrawal of RM10,000 from Account 1, his team would not relinquish its responsibility of making the best decision for the future of its members, he said.

Earlier, he said EPF’s data show that 43%, or 5.38 million contributors under the age of 55, only had savings below RM10,000 in their Account 1.

In addition, 54% or 137,000 of the 245,000 contributors aged 54 this year, had less than RM50,000 in Account 1, and would have to survive with only RM200 per month for 20 years from the EPF savings.

Tunku Alizakri blames low salaries for the low amounts in Account 1.

Misguided priorities

Muhammed, who is also a former Khazanah Research director said the budget missed the opportunity to develop better social protection policies for the people.

The Bantuan Sara Hidup scheme, rebranded as Bantuan Prihatin Rakyat, is also insufficient, he said.

“The assistance provided by the government is too small to make an impact, especially when many Malaysians, be it in B40 or M40 groups, are facing financial difficulties due to retrenchment, lack of jobs or reduced working hours.

“There is no cash assistance given to them.”

Muhammed added that the government’s inability to set its priorities right is clear when the Special Affairs Department (Jasa) received RM81.5 million under the Ministry of Communication and Information’s allocation.

“This is so blatant when other more important items in the budget are receiving much lower allocations.”

Jasa is a department that was actively used by the previous Barisan Nasional government for its public messaging campaigns, now revived and significantly scaled up in size and budget.

The unit is making a comeback after it was disbanded by the Pakatan Harapan government in 2018.

Muhammed also disagreed with the one-off payment of RM500 to civil servants as provided under Budget 2021, saying that this money could instead be channelled to vulnerable groups.

“Why do we need to assist civil servants who already have steady jobs? The RM500 bonus to civil servants is wrong, they don’t need this bonus.”

He said it was better to give it to the poor than asking them to take out their EPF money. – November 13, 2020.