PETALING JAYA: Economists, a financial planner and an NGO representing senior citizens have slammed Perikatan Nasional’s (PN) manifesto promise to allow another round of Employees Provident Fund (EPF) withdrawal if it comes to power after the 15th general election (GE15).
Even caretaker Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said allowing another EPF withdrawal will not be in the best interest of Malaysians due to the long-term repercussions.
He said the promise PN made does not represent assistance from the government and instead puts the contributors’ savings for their retirement at stake.
Veteran economist Tan Sri Ramon Navaratnam strongly condemned the idea as well. He said it would put Malaysians in grave (financial) danger if they continued to use up savings which are meant for their future, especially with the global economic climate being uncertain.
“The global recession can continue for a long time. This can trigger high unemployment and low income flows. So, it is best to disallow people from taking out their EPF savings.
“It is fine if people withdraw from their EPF account to purchase a house, for instance. However, calculations show that we cannot afford to allow contributors to withdraw just to have spending money.
“Doing so will set Malaysia on a path to bankruptcy like Sri Lanka and Greece,” he stressed.
Ramon reminded politicians that promises are made not to be broken. Instead, they should focus on ways to increase financial efficiency, eliminate corruption, cut down on some developmental expenditures and let the private sector expand.
Universiti Malaya Business and Economic Faculty deputy dean of research Assoc Prof Datin Dr Izlin Ismail warned that future withdrawals from the EPF would affect contributors and the provident fund.
“Understandably, politicians want to gain votes through promises people want to hear. But another round of EPF withdrawal will cause serious consequences for future generations and at the same time, prompt EPF to liquidate its investments.
“If a government allows contributors to withdraw from their EPF accounts, then there must be some sort of mechanism that will help them top up their accounts when the economy improves,” she said.
Izlin emphasised that while the withdrawal may help some people pay off their loans or debts, others put their withdrawals into higher-return investments, which can turn out to be scams.
Cheah Tuck Wing, founding president of Third Age Media, an NGO representing the interests of senior citizens, said he is very angry that politicians are proposing such a withdrawal again.
“It is not only unsustainable but harms the people’s retirement prospects. From day one when the government mooted this idea, we were already against it.
“Look what happened now. Almost RM150 billion has been withdrawn from the three previous withdrawals, leaving thousands with no savings for retirement.”
He said current contributors are also affected with a much lower dividend expected next year because of a smaller fund size.
“In times of crisis like the pandemic, the government must use treasury funds to help the people and not ask us to deplete our savings.
“In a country that is so rich in resources, we should be able to implement a universal basic income of RM3,000 per household for the B40 group.”
Cheah added that the authorities should go after irresponsible businesses and individuals that abuse the tax system.
He said the Inland Revenue Board should identify such individuals and businesses.
He also said addressing issues such as the increasing cost of living, inflation, unemployment, training and upskilling is more sustainable in the long run.
