Cash handouts instead of EPF withdrawals, think-tank suggests, as majority Malaysians lack retirement savings

KPRU said the i-Lestari withdrawal facility, which is set to cost RM40 billion, would also affect EPF’s long-term investment capacity and affect an individual’s retirement plans as many are not able to withdraw RM500 for a period of 12 months. — Reuters pic
KPRU said the i-Lestari withdrawal facility, which is set to cost RM40 billion, would also affect EPF’s long-term investment capacity and affect an individual’s retirement plans as many are not able to withdraw RM500 for a period of 12 months. — Reuters pic

KUALA LUMPUR, March 25 — A think-tank has suggested that the government directly provide cash handouts instead of allowing withdrawals from the Employees Provident Fund (EPF), as only three million Malaysians in the workforce have enough money saved up for their retirement. 

The Institute of Political Studies for Change (KPRU) said the i-Lestari withdrawal facility, which is set to cost RM40 billion, would also affect EPF’s long-term investment capacity and affect an individual’s retirement plans as many are not able to withdraw RM500 for a period of 12 months.

“In other words, almost 11.5 million workers in Malaysia do not have enough retirement funds to sustain themselves after 55-years-old.

“Meanwhile, in EPF’s 2018 annual report, it was stated that about 2.8 million Malaysians lack sufficient savings in their Account 2 with less than RM20,000 in their account.

“To solve the above issue, KPRU is suggesting that direct cash handouts to each citizen according to age and income is the most effective method of preserving the peoples’ way of life, increasing household expenditures and restoring the national economy,” it said in a statement here.

On Monday, Prime Minister Tan Sri Muhyiddin Yassin had announced that the facility would enable EPF contributors to withdraw a maximum amount of RM500 monthly for a period of 12 months.

Muhyiddin had said that i-Lestari withdrawal facilities were one of the many initiatives introduced by the government to lessen the burden of the people affected by the enforcement of the movement control order (MCO) nationwide amid the Covid-19 outbreak.

The think-tank further cited data provided by Bank Negara Malaysia on how 75 per cent of Malaysians were not able to come up with RM1,000 in emergency funds.

“At such a critical juncture, their lives are disrupted and they are not channelled the assistance enjoyed by the B40. Are these people willing to spend on their household needs during the MCO with savings not more than RM1,000?

“To restore the national economy and safeguard the peoples’ welfare, the M40 group cannot be excluded from government assistance,” it said.

KPRU then gave examples of how both Singapore and the United States were countries that provided cash handouts according to an individual’s income level which ensured no household was left behind, regardless of their affiliation to the B40 or M40 groups which was fairer.

For the US, KPRU said the US government provided US$1,200 (RM5,262) for each individual and an additional US$500 for each qualifying child, while Singapore was the first South-east Asian country to introduce a one-off cash payment for Singaporeans aged 21 and above based on their income.

“Malaysia’s economic stimulus package still has not introduced a comprehensive cash handout plan to all its citizens. Among the closest schemes is the Household Living Aid or Bantuan Sara Hidup (BSH) that was opened to B40 or low-income households,” it added.

Under the current circumstances, KPRU said the cash handout could be distributed in the form of e-wallet or digital vouchers to avoid any instances of panic buying, and therefore, lower the risk of widespread Covid-19 infections.

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