KUALA LUMPUR, June 19 — The Malaysia Trades Union Congress (MTUC) has urged the government to replace the Employees’ Provident Fund’s (EPF) i-Lestari withdrawal scheme with a RM500 monthly cash stimulus for B40 workers.
MTUC secretary-general J. Solomon said this in response to EPF CEO Tunku Alizakri Alias’ recent revelation that the fund is worried because some members have already exhausted their Account 2 after two months of withdrawing the RM500 per month allowed under the scheme.
“The MTUC had warned the government time and again that this move was highly dangerous because of this very reason. It is obvious that this group that needs the old-age savings most after they retire will be the ‘victims’ of the scheme, and just after two months, we have been proven right.
“The fact is most of these workers need the RM500 per month subsidy badly to survive with many having lost their jobs or taken huge pay cuts. In view of this, MTUC is calling for the government to convert this scheme to a RM500 a month cash aid for the B40 workers with immediate effect. This will help the B40 workers keep their EPF savings for their old-age,” he said in a statement today.
On June 17, EPF said the majority of the 4.1 million applications for the i-Lestari Account 2 withdrawals are from the B40 group with a total of RM1.94 billion withdrawn.
The i-Lestari facility allows EPF members aged 55 and below to withdraw between RM50 to RM500 a month for 12 months through March 31, 2021, subject to available funds in the members’ own EPF Account 2.
The B40 group is defined as those with a household income of less than RM4,360 per month. Half of Malaysia’s 8.8 million wage earners earned less than RM2,308 a month in 2018, according to the Department of Statistics Malaysia’s (DoSM) Salary and Wages Survey Report 2018.
Commenting further on the EPF data, Solomon said that B40 workers should not be made to rely on their own retirement savings as most do not have enough money as of now in the fund and this will have a serious impact on the survival of these workers in their old age.
Solomon insisted that any stimulus or economic package by the government must not involve workers being offered an easy way out by allowing them to withdraw from their savings.
“EPF members must be stopped from unnecessarily withdrawing money from their Account 2, as it would have an impact on their retirement savings. They also need this account to help in their children’s education and to get a roof over their heads.
“At least two-thirds of EPF members do not have the basic amount of retirement savings recommended for their respective age band. By reducing their contribution or withdrawing savings from the EPF, not only will members be using money meant for their retirement, they will also lose dividends plus the compounding power of that lost savings,” he said.