Wee pokes holes in proposal to credit RM500 into EPF accounts

MCA president Wee Ka Siong (BN-Ayer Hitam) today questioned Putrajaya’s proposal to set aside a RM1 billion allocation for the purpose of crediting RM500 to Employees Provident Fund (EPF) contributors who have less than RM10,000 in their EPF Account 1.

In his debate on the government’s Budget 2023 bill, he said since the proposal targets contributors aged 40-54, the maths do not add up and most would not benefit from the plan.

He explained that most EPF contributors within that age range would have worked for at least 20 years on average and it is “impossible” for them to have less than RM10,000 in their Account 1.

“Let’s say one received a monthly salary of RM1,000. Under the basic EPF contribution rules, the monthly contribution in this person’s account would be RM240. Meaning, it would be (close to) RM3,000 a year.

“So, if this person has worked for 20 years, the amount in his Account 1 would have reached close to RM60,000. Meaning some RM42,000 would be in Account 1 and some RM18,000 in Account 2.

“And it is impossible for this person to have withdrawn the whole RM42,000 in the recent i-Citra, i-Sinar, special withdrawal, and such.

“Even if there is any such case, definitely not the whole cohort of 1.96 million contributors. So, what I mean here, this RM1 billion allocation won’t reach anyone. Maybe some, if any at all,” he said.

Wee was debating the budget bill that was tabled by Prime Minister Anwar Ibrahim last week.

In the bill, the government said it agreed to add RM500 into the Account 1 of EPF contributors aged between 40 and 54 who have less than RM10,000 in savings, with a total allocation of RM1 billion.

Wrong target group

In his debate speech today, Wee said that according to EPF’s financial report for the year ending Dec 31, 2021, the fund has 15.7 million contributors.

Of this figure, he said 53.4 percent are active contributors while the rest are inactive.

He pointed out another alleged flaw, where he said the initiative may only benefit contributors who are no longer active.

According to the former transport minister, some contributors within the age range may have less than RM10,000 in savings in their EPF accounts, but this would be due to them no longer actively contributing.

He said examples of these would include those who have started their own businesses - and therefore became employers - or those who migrated overseas but did not close their EPF accounts.

“That is why I said we must have a targeted approach. Do not target the wrong group.

“I want to ask (the government), do we want to help (EPF) members who are active or those who are no longer active?”

Wee then asked the prime minister to instruct the EPF to explain how the fund arrived at this plan and calculation to allocate RM1 billion for some two million contributors. - Mkini