Govt to study proposal for EPF Account 1 withdrawals

Prime Minister Muhyiddin Yassin says the government is studying the suggestion to allow certain groups such as laid off workers to withdraw funds from their EPF Account 1.

“I have discussed with the finance ministry and we basically agree and are prepared to study the proposal for contributors who really need to withdraw allocations from Account 1,” he said today.

Earlier this year, the government allowed a reduction in contribution rate of workers from 11% to 7% as well as i-Lestari withdrawals from Account 2 of RM6,000 per contributor.

Almost 70% of EPF members opted to reduce the workers’ contribution to 7.0%, pushing disposable income to close to RM700 million per month, Muhyiddin said in an interview with Bernama.

Adding that over 30% of EPF members have savings of less than RM5,000 in their accounts, he said EPF savings might not necessarily address contributors’ cash flow problems.

“We will study the method to facilitate the process for those who need support and announce the decision soon,” he said, adding that consideration will be given to certain groups who have been badly affected.

He also said Malaysia was the only country that had provided a blanket moratorium on loans as part of efforts to address the impact of the Covid-19 pandemic.

“There’s no other country that took the approach taken by Malaysia by offering an automatic moratorium to all borrowers. This method has advantages in that it gives assistance to many, quickly.”

However, because many borrowers had made use of this facility, he said it had reduced funds for those in need while banking institutions also had less funds to provide new loans.

“Thus, the government is switching to a more targeted approach.”

As of Oct 16, more than 650,000 applications for loan repayment assistance had been made, comprising 603,500 individual applications, 43,000 applications from SMEs, and 3,500 applications from other businesses.

Of these, he said, the approval rate was 98%.