Targeted EPF withdrawal will worsen insufficiency of retirement savings, says Finance Ministry

KUALA LUMPUR: Any new additional pre-retirement withdrawals, whether targeted or open, will further exacerbate the issue of insufficient retirement savings, which is currently at a very alarming level, the Finance Ministry said.

The ministry said it is also not a solution to the increasing financial burden of the people.

“As of Sept 30, 2023, a total of 6.3 million members or 48 per cent of members under 55 years old have savings of less than RM10,000 in the Employees Provident Fund (EPF) compared with 4.7 million members or 37 per cent recorded in April 2020 before special withdrawals related to Covid-19 were introduced.

“With savings of less than RM10,000, members are expected to have retirement income of less than RM42 per month for a period of 20 years,” it said in a written reply published on the Parliament website Thursday (Nov 23).

MoF was responding to a question from Hassan Abdul Karim (PH-Pasir Gudang), who asked whether the government is considering the request of people currently experiencing hardship to allow targeted withdrawals from their EPF and what the government’s stance on these targeted EPF withdrawals.

The ministry said Malaysia’s economy is no longer in the recovery phase and the gross domestic product (GDP) has surpassed pre-pandemic levels.

“Economic activities are picking up as many businesses are operating at full capacity and most workers have returned to work to generate income.

“This is evident as the number of active EPF members has also reached the highest level in history, namely 8.5 million as of September 2023, with an increase of 910,000 members or 12 per cent compared with 7.6 million recorded in September 2021,” it said.

Meanwhile, in response to a question from Kalam Salan (PN-Sabak Bernam) on the extent of the feasibility study conducted on the Goods and Services Tax (GST), taking into account the current economic situation in the fiscal reform of the country and its implications for the people, MoF said the government has no intention of reintroducing GST at the moment.

“Any changes to tax policies will take into account the impact on the economy and the cost of living for the people.

“Therefore, the government is always monitoring the current economic situation and considering fiscal measures that are suitable for short-term and medium-term needs,” it said.

Responding to a question from Tan Kok Wai (PH-Cheras) on the total amount of contributions made by Malaysia to other countries for each year in the last two and a half years and the details of each contribution, MoF said Malaysia has contributed a total of RM10.93mil to countries affected by disasters between 2021 and June 2023.

The amount includes RM1.68mil for 2021, RM3.64mil for 2022 and RM5.61mil for the period from January to June 2023. – Bernama