EPF withdrawals need to be targeted, given on a monthly basis and not 'one off' - Economist

KUALA LUMPUR: Withdrawal of money from Account One of the Employees Provident Fund (EPF) contributions can be done but it needs to be on a targeted basis and only to those in need.

According to Socso Head of Economics of the Future Labour Market Research Centre, Assoc Prof Dr Yusof Saari, the proposal should be studied carefully as it involves employee retirement insurance and government loans in project implementation as well as long-term investment.

“My suggestion is that the government finds a midpoint between the needs of the people and the economy, therefore the most ideal is to allow withdrawals only to those in need but it cannot be given in lump sum but on a monthly basis.

"Some employees are still affected by salary cuts, dismissed, cannot get a better job and they need help.

But from the economic point of view, the EPF is a source of domestic government loans to implement projects and investments.

“So if the government allows RM10,000 per person, we will find a huge shortage of funds and affect investment and macroeconomics.

"So we need to be careful to balance those in need and the long-term economic impact," he told Astro AWANI, on Saturday.

Dr Yusof added that the EPF withdrawal measures are widely used in developed countries to ease the burden of the people and minimise the economic impact of COVID-19.

Therefore, he added, the government needs to find a midpoint between those in need, namely workers, and the economic impact.

Last Monday, former prime minister Datuk Seri Najib Tun Razak proposed the EPF to allow contributors to withdraw a maximum of RM10,000 on a one-off basis to meet the impact of the COVID-19 epidemic.

However, Prime Minister Tan Sri Muhyiddin Yassin hinted that it would be difficult for the government to allow withdrawal from Account One of the EPF because for fear they would face bigger problems in the future.

In fact, the EPF Chief Executive Officer, Tunku Alizakri Alias ​​also stated that the contribution in the EPF is the contributor's future insurance and if withdrawal of savings from the account is allowed, it will endanger them from getting the protection.