EPF Withdrawals Not A Viable Solution To Cash Flow Issues – Experts


KUALA LUMPUR,  (Bernama) – Just RM42 to spend every month for 20 years after retirement.

This is the grim reality awaiting some 6.1 million Employees Provident Fund (EPF) contributors aged below 55, or 48 percent of its total members, who had savings of less than RM10,000 in their EPF accounts as of December 2021.

These statistics were shared by EPF chief executive officer Datuk Seri Amir Hamzah Azizan in March last year while commenting on the status of its 12.6 million members’ retirement funds following three special withdrawals, namely i-Lestari, i-Sinar and the latest i-Citra in February 2022.

The EPF’s objective of ensuring the economic well-being of the nation’s workforce post-retirement will suffer a setback if fresh requests for another special withdrawal are approved.

Economic analysts Bernama spoke to view the repeated EPF withdrawals as an unviable solution to helping people cope with the higher cost of living.



Universiti Putra Malaysia Faculty of Human Ecology dean Prof Dr Mohamad Fazli Sabri

Universiti Putra Malaysia Faculty of Human Ecology dean Prof Dr Mohamad Fazli Sabri said the prevailing cost of living issue is among the factors compelling people to opt for EPF withdrawals as they see it as easy access to cash.

This is why, he added, the government should focus on dealing with the rising cost of living comprehensively and take proactive measures to help those who have lost their jobs as well as petty traders struggling to keep their businesses going.

“The government has to seek comprehensive solutions because the rising cost of goods is not just a local issue but a global one as other countries such the US (United States) and the United Kingdom as well as European nations are also facing the same issue.

“If (EPF) contributors want to withdraw their savings for this reason (cost of living), we’re worried about the challenges that await them in future. The economic conditions may be even more challenging then and how are the contributors going to survive with so little savings?” he asked.

Mohamad Fazli said the commitment to addressing the rising cost of living given by the unity government when it came to power is a challenge that they must take up to relieve the financial burden of the people.

To this end, the government must introduce a continuous stream of initiatives to strengthen supply chains and food security in order to bring down prices.

“I believe the people’s welfare will be protected if the cost of living problem and issues related to rising prices of goods are addressed effectively,” he added.

Recently, a group called Pertubuhan Aktivis Rakyat Malaysia (ProRakyat) urged the government to consider allowing another round of EPF withdrawals of up to RM30,000.

Its president Khairul Anuar Othman said the one-off withdrawal of between RM10,000 and RM30,000 is a short-term solution so that the people will not run out of cash to spend. 

He said some EPF contributors are still reeling from the effects of the COVID-19 pandemic including those who lost their jobs and others who have outstanding bank loan payments to settle.



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In response to ProRakyat’s request, Prime Minister Datuk Seri Anwar Ibrahim said the government will have to consider the plight and the future of EPF contributors before they are allowed another round of special withdrawals. 

He said it was better for the government to look for other effective options to help those impacted by or who had lost their source of income due to the COVID-19 pandemic. 

Mohamad Fazli agreed, saying that allowing a series of EPF withdrawals will have serious implications on contributors after they retire as they may not have enough savings to live on.

“Contributors must go back to the original purpose of contributing to EPF. We all know EPF is a retirement savings fund so it will be problematic for the members if they don’t have enough savings by the time they retire… how can they expect EPF to help them,” he said.

According to EPF records, a total of 2.6 million contributors had savings of less than RM1,000 as of December 2021, reflecting an increase of 86 percent from the 1.4 million members with savings of less than RM1,000 in April 2020.



Mohamad Fazli added that to assist the people, the government can also consider implementing various non-monetary approaches that will not add more burden to its financial resources.

These approaches include providing employment opportunities to those who had lost their jobs through collaborations with government-linked companies and government-linked investment companies.

“Exposure to technical skills, as well as reskilling and upskilling initiatives, will also enhance their (job seekers') marketability in line with the current industry trends,” he said, adding that those keen on starting a business or whose businesses were impacted by COVID-19 will benefit if the agencies concerned are able to assist them in terms of providing them with training and equipment as well as capital.

Head of Department of Finance, Faculty of Business and Economics, Universiti Malaya, Associate Prof Dr Nurul Shahnaz Ahmad Mahdzan

Head of the Department of Finance, Faculty of Business and Economics, at Universiti Malaya Associate Prof Dr Nurul Shahnaz Ahmad Mahdzan concurred, saying that the government should provide more initiatives to empower the gig economy and small and medium enterprise (SME) sector.

“Empowering these two platforms is the right approach to improving the economy of the people of this country.

“The government has previously given them (companies) cash incentives but I feel there’s no need for cash incentives… maybe the government can give incentives through tax deductions for companies that create job opportunities for the jobless,” she said.

Acknowledging that some people are in dire need of cash to buy essential items or pay their utility bills, Nurul Shahnaz said zakat centres can play a role here by extending assistance to those from the non-hardcore poor category who have lost their livelihoods.

She is confident such a move will divert the people’s attention from EPF which “seems to have become their piggy bank”.

“It may also be possible for aid to be given to (needy) non-Muslims, for example, in the form of capital for them to start a business,” she added.


Translated by Rema Nambiar





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