THE utilisation of EPF savings as collateral for a bank loan will not have an impact on the dividend payouts, Prime Minister Anwar Ibrahim said today.
He said contributors who choose to use their savings in this manner will receive the same dividends as everyone else.
“Let’s say (a contributor applying for a bank loan) puts up RM50,000 as collateral. They will still receive the full dividend (for the sum they have used as collateral). There won’t be a cut,” the finance minister said during question time today in the Dewan Rakyat.
The dividends could even be enough to pay for the loan should the borrower default, he said.
“Hence, it will also not affect (the borrowers) badly because (they will still receive dividends on the sum that has been put up as collateral). The risk (of having the collateral seized in the event of a default) is minimal,” he added.
Anwar was responding to Muslimin Yahaya (Sungai Besar-PN), who asked about what would happen if the EPF contributor could not repay the loan and whether putting up the retirement savings as collateral was in violation of the EPF Act.
Anwar denied the latter, saying the legality of the scheme had been discussed between the EPF and the attorney-general.
He urged Malay contributors to apply for Islamic loans, which have a lower interest rate.
“But we are also not stopping non-Muslim members who choose to borrow (and pay the) conventional rates,” he said.
Anwar stressed that a member could still withdraw from his EPF account 2 to pay for education, the haj, and medical expenses.
He has previously said that the new scheme to allow retirement funds to be used as collateral for borrowing will only apply to those who are in dire straits.
Anwar has been firm on not permitting more special EPF withdrawals as they will affect the country’s finances and reduce dividends. – March 21, 2023.
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