PETALING JAYA: There are other ways for the government to help Employees Provident Fund (EPF) contributors who are in financial distress, instead of allowing them to use their EPF savings as collateral for bank loans.
Universiti Utara Malaysia economics professor Dr K. Kuperan Viswanathan said EPF savings as bank loan collateral will only get members into worse financial problems and more difficulties.
“What would happen if they are unable to pay off their loans? The banks can seize their money. How will this help them survive when they retire?
“The government needs to come up with a scheme to help those facing financial problems, such as implementing a universal income scheme, which targets those who cannot make ends meet.”
Kuperan said the scheme could top up the income of members facing financial difficulties, most likely about RM200 to RM300 monthly or maybe more.
He added that these people are not able to earn enough because they may lack the necessary skills or education to earn higher incomes.
“These are the ones who desperately need and deserve help,” he said, adding that the government could provide subsidies and assistance to those in need.
Kuperan said his suggestion will benefit the economy as the subsidy or assistance will be used for consumption and increase economic activity. It will also help reduce social problems such as people turning to crime for money.
It is also a better use of taxpayers’ money instead of investing in megaprojects where there could be misuse of funds or money getting “lost” in the system, he added.
According to economic experts, the EPF could use the contribution money as collateral for bank loans to help members who have financial problems.
Kuperan was commenting on the suggestion by Prof Dr Shazali Abu Mansor of i-CATS University College Kuching that EPF savings could be used as collateral for bank loans to help members in financial distress.
Shazali said the EPF can take this alternative, other than allowing members to withdraw their contributions as previously implemented by the government.
During the height of the Covid-19 pandemic, the government allowed a special one-off withdrawal of RM10,000, apart from allowing applications to withdraw through i-Lestari, i-Sinar, and i-Citra schemes.
Former finance minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz had said a total of 6.62 million EPF members or 52% of the total 12.78 million members aged under 55, had less than RM10,000 in their savings as of June 30 last year.
He also said 3.2 million members under the age of 55 were at a very critical savings level of less than RM1,000.
Of the 1.62 million active EPF members aged between 45 and 59 as of Sept 30 last year, 479,000 or 29.6% had savings not exceeding RM50,000.
EMIR Research president and CEO Datuk Dr Rais Hussin Mohamed Ariff, who is also against EPF members using their savings as bank loan collateral, said a targeted universal income system would be a better idea to help those with financial woes.
He also questioned who could help loan defaulters once their money is seized by the banks.
“Instead of spending money on multi-billion ringgit projects, the funds could be put to better use by helping those who are unable to make ends meet.
“The money would be better used on a targeted universal benefits system.
“The cost of living keeps going up. Even if a person retires with RM50,000, how long will that last? Once it is depleted, the government might need to help them.”
Rais said the government has to find better ways to make use of funds so that, at the end of the day, they could help the people.
