EPF may have to sell overseas assets if fourth round of withdrawals allowed

 

PARLIAMENT | If the government allows contributors to withdraw money from their retirement savings accounts under the Employees Provident Fund (EPF) for the fourth time, the statutory body may be forced to sell more of its investment assets overseas.

“If we were to allow the withdrawal of RM10,000 on a one-off basis, the number of members who are qualified to make the withdrawals is expected to be around 6.3 million people, which may involve a total of RM63 billion of additional withdrawals.

“If this is allowed, EPF will have to implement portfolio balancing and its impact may exceed the withdrawals worth RM63 billion.

“In order to prepare for the withdrawals worth RM63 billion, EPF will have to sell more of its investment assets overseas in a volatile market, especially with the recent Russia-Ukraine crisis,” Finance Minister Tengku Zafrul Abdul Aziz said.

He said this while winding up the debate on the royal address in the Dewan Rakyat today.

A number of lawmakers had previously urged, in their debates, for the government to allow another round of withdrawals from EPF due to the financial difficulties faced by the rakyat after two years under the Covid-19 pandemic.

These MPs include Lim Guan Eng (Pakatan Harapan-Bagan), Ahmad Fadhli Shaari (PAS-Pasir Mas), Najib Abdul Razak (BN-Pekan), Ahmad Hassan (Warisan-Papar), Abdul Azeez Abdul Rahim (BN-Baling), Bung Moktar Radin (BN-Kinabatangan), Ahmad Jazlan Yaakub (BN-Machang), Alice Lau (Harapan-Lanang) and Shaharizukirnain Abd Kadir (PAS-Setiu).

Finance Minister Tengku Zafrul Abdul Aziz

Zafrul has repeatedly said he does not agree to another round of withdrawals from EPF as 48 percent of members under the age of 55 years old now have less than RM10,000 in their retirement savings account after the three previous rounds of withdrawals.

In the Dewan Rakyat today, he noted that EPF’s dividend for conventional savings for 2021 could have reached 6.7 percent, instead of 6.1 percent, had it not been for the three previous rounds of withdrawals.

“This means RM5.4 billion in terms of the additional dividend could have been distributed to all EPF members if those withdrawals had not been made.

“This loss of RM5.4 billion from the dividend has caused about 5.3 million members, who have never withdrawn their savings through any of the withdrawal schemes previously, to be forced to accept lower returns on their savings.

“I would like to ask all the YBs, who also represent the contributors who have never withdrawn their savings: is this fair?” Zafrul said. - Mkini