EPF funds: For future savings or daily use?

Financial planners agree that contributors should not be allowed to withdraw their Employees Provident Fund (EPF) savings to settle credit card debts in bankruptcy cases.

This sentiment was voiced based on the ground that EPF is designed for retirement fund as well as to protect the beneficiary and their family.

Senior Wealth Planner at Phillip Wealth Planners Nicholas Chu strongly supports the idea because according to him, the purpose of EPF money is not for debt cancellation.

“Once the government allow withdrawal of EPF money to pay for credit card debts, as human behaviour, it will cultivate the contributors to start spending uncontrollably which in their mind they will keep think ‘I still have money in EPF’”, said Chu.

Chu added that bankruptcy issue gives impact to the country’s economic structure which the government should start looking into by implementing prevention action or policy.

“The best solution for EPF members is to learn the right money management mindset. If they can’t learn before bankruptcy, let them suffer from the bankruptcy burden which may be a good lesson for them.

“I believe that bankruptcy is not a big issue, once they learn from experience, they can quickly recover,” he added.

Commenting on the issue raised by the public on using the EPF funds to repay their home loan, CEO of iMoney Malaysia, Jason Kon said it can be a good or bad idea.

According to him the whole reason the EPF exists is to force consumers to save money. It earns a healthy dividend every year, which helps contributors grow those savings over their working years, and acts as income during their retirement years.

“If you withdraw your EPF to pay for short term needs, you jeopardise future savings in favour of short term enjoyment.

“A home, on the other hand is a long term investment - one that not only can provide shelter for life, but also give you investment gains over the long term.

“In this case, using the EPF contributions to pay for your home would just mean shifting your money from one good long term investment to another,” said Kon.

Contrast with these ideas, most Malaysians opposed the idea in which they believe they have the rights to claim the money while there are also who agree with the initiative.

Astro AWANI received mixed reaction from Facebook users regarding this matter.

Al Mantol: If I don’t work anymore, I should be allowed to withdraw my money for my daily expenses. Why do I have to wait until I’m 50? That’s my money. Why can’t the government think of the people’s difficulties? Whatever I want to do with the money, I have the rights to do so.

Azman AlBaith: The question here is, if the employee has been blacklisted or bankrupt, will all the money in the EPF fund be seized as well?

Syalina Ahmad: I don’t agree. Supposedly we can withdraw the EPF money to settle our credit cards debt with a condition that the contributors can’t apply for a new credit card.

Azrin Aziz Abdul Karim: When you get older and have no money, then you will start thinking. That’s the real purpose of EPF. True that the EPF money is invested by the government to expand the conutry’s economy. It’s not like all of your money will disappear.

Nurulfitriah Abd Mutalib: This is the danger of using credit card. When using it, you don’t think clearly whether you can afford it or not. I’m done with credit cards. I’ve settled it slowly and now I just use cash.