Give interest-free loans instead of taking from EPF nest egg, MTUC urges govt

MTUC's secretary-general J. Solomon said if workers were to withdraw money from their EPF savings, it would result in the loss of annual and compounded dividends in the long term. — Reuters pic
MTUC's secretary-general J. Solomon said if workers were to withdraw money from their EPF savings, it would result in the loss of annual and compounded dividends in the long term. — Reuters pic

KUALA LUMPUR, March 23 — The Malaysian Trades Union Congress (MTUC) has urged the government to use its reserve funds to provide interest-free loans, rather than permit workers to make withdrawals from their Employees Provident Fund (EPF) accounts.

Its secretary-general J. Solomon said the loans, which should be kept to at least RM5,000 per person, will help workers to sustain themselves and their families during the ongoing Covid-19 pandemic.

“They should be allowed to start repaying through salary deductions once the situation returns to normal. The government should have the moral courage to dig into its reserves to pump this money directly into the pockets of workers without having to compromise their old age savings,” he said in a statement.

Adding that the EPF announcement by Prime Minister Tan Sri Muhyidin Yassin was “shocking”, Solomon said if workers were to withdraw money from their EPF savings, it would result in the loss of annual and compounded dividends in the long term

“The government, whether it realises it or not, is actually trying to make itself look good by allowing this. In other words, it is using the workers’ savings to pump in RM50 billion for the next nine months. 

“This is not a morally right thing to do. It is a case of having to ‘rob’ from one’s own savings, arising from the failure of the government to protect its people,” he said.

Noting that most EPF contributors already use their second account to reduce their housing loan repayment to save on their interest, or depend on this account for their tertiary education and medical needs, Solomon added many have already opted to reduce their monthly contributions by 4 per cent which will have an adverse effect on their savings.

“We wish to remind the government that the current situation requires ingenuity from our economic planners to ease the burden of all the workers in the country. But to ask them to take out their own savings at a time like this is adding salt to an injury.

“The MTUC’s stand is simple in the current situation; do not touch the workers’ EPF, cut their salaries or retrench them because the social repercussions are indeed serious. We urge the government to rethink this plan and scrap it,” he said.

Earlier today, Muhyiddin said all contributors aged 55 and below will be allowed to withdraw up to RM500 a month for a period of 12 months from their second account, as one of the Economic Action Council’s initiatives to reduce the financial burden stemming from the pandemic.

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