EPF dividend could have been 6.7% if not for withdrawal schemes, says Tengku Zafrul

Aminah Farid Aminah Farid Updated 2 years ago · Published on 14 Mar 2022 4:37PM · 5 Comments

Finance Minister Tengku Zafrul Tengku Abdul Aziz says the EPF dividend rate for 2021 would have been at 6.7% if it were not for the various withdrawals schemes introduced by the government. – The Malaysian Insight file pic, March 14, 2022.

THE Employees’ Provident Fund’s (EPF) dividend for 2021 would have been higher than the announced 6.1% if not for the i-Sinar, i-Citra, and i-Lestari withdrawal schemes, Finance Minister Tengku Zafrul Tengku Abdul Aziz told Parliament today.

Tengku Zafrul said if it were not for the withdrawal schemes, the dividend rate could have gone up to 6.7% instead of the recently announced 6.1%.

The government introduced these schemes to allow members to withdraw their pension funds during the Covid-19 pandemic hardship.

The finance minister said more than 5.3 million EPF contributors who did not withdraw their retirement savings under these schemes were forced to receive a lower dividend rate as a consequence.

He said EPF saw a loss of RM5.4 billion from these schemes that could have been distributed to all of its 14 million members.

In a reply to Abdul Azeez Rahim (Baling-BN) and Salim Sharif (Jempol-BN), Tengku Zafrul asked if this was fair to the members who did not withdraw their EPF savings and could have received a higher dividend rate.

“The loss of RM5.4 billion from this dividend has resulted in approximately 5.3 million members who had never withdrawn their savings through any withdrawal scheme being forced to accept lower dividend rates on their savings.

“I would like to ask the MPs who also represent contributors who did not need to withdraw their savings, is this fair?” he said.

Meanwhile, on the calls by lawmakers to allow EPF members to withdraw an additional RM10,000 from their accounts, Tengku Zafrul said if Putrajaya were to allow this, it would see withdrawals amounting to RM63 billion, at the least.

“The EPF will need to carry out portfolio balancing and the impact may be more than just RM63 billion, so if we were to allow it, the EPF will need to sell more overseas investment assets amid the backdrop of a volatile market rate, with the Russia-Ukraine crisis going on and others.

“They will also need to stop investing in the country for the short- and medium-term,” he said.

Tengku Zafrul said from the withdrawal schemes, which were introduced early on during the pandemic to help cushion the impact of it, EPF saw a withdrawal of RM101 billion, which benefited over 58% of EPF members.

He added that the special withdrawal also resulted in a significant decrease in the percentage of members achieving Basic Savings (RM240,000 at 55 years) from 36% in 2020 to 30% by the end of 2021.

He also said 48% of EPF members below 55 years old have less than RM10,000 savings in their accounts.

There have been calls from several quarters, including from Umno leaders, for EPF to introduce another scheme to allow members to withdraw money to help them overcome financial hardship. – March 14, 2022.

Sign up or sign in here to comment.

Comments

  • So the dividend was sacrificed.
    People who worked hard to make the contribution wasted on those who didnt, worst the money to help the poor should come from taxes collected not interest from contributors.

    Posted 2 years ago by Alphonz Jayaraman · Reply

  • What would have been the rate if RM10 million of our EPF money was not donated to the flood victims via some unnamed NGOs? Where are the accounts for that donation?

    Posted 2 years ago by Yoon Kok · Reply

  • Interesting revelations! So basically, the contributors who were disciplined got punished and their money was given away without permission.

    Posted 2 years ago by Anonymous 1234 · Reply

  • How about the "donation" from EPF to 1MDB? At least the members who withdrew their own contributions got to use them. For 1MDB, members contributions were used for the benefit of a few cronies and thieves

    Posted 2 years ago by Jeevaraj Nadarajah · Reply

  • Unbelievable!!! Why should dividends be affected? Why was this not disclosed before???

    Posted 2 years ago by [email protected] Thirunavakarasar · Reply