On Wednesday, the Employees Provident Fund expanded the criteria for withdrawals from the i-Sinar facility. This was done to ease the financial burden of members badly hit by the Covid-19 pandemic. EPF gives a detailed explanation of the facility. ADIB POVERA reports
Question: How did EPF come up with the i-Sinar mechanism and criteria?
Answer: i-Sinar was formulated following extensive deliberation and consultation with key stakeholders from the public and private sectors, including the Finance Ministry.
The criteria and mechanism were determined with due consideration to balance members' needs, as well as the EPF's mandate to safeguard their retirement.
Q: What is your reaction to the disappointment expressed by some EPF contributors over the conditions set for i-Sinar application, which they labelled as troublesome and difficult?
A: There are no conditions for i-Sinar application and what is outlined are the criteria to ensure that the application matches EPF's internal data, which will easily and safely expedite the approval process.
Verification is required to avoid fraud and improper withdrawal of i-Sinar funds by third parties. Members who fulfil the criteria will have their application automatically approved.
Only confirmation of the maximum amount is required in a member's online application, and the process is not difficult. Members who wish to apply for the facility can begin submitting their application starting Dec 21.
Category 1 is for members who have no contribution for two consecutive months upon application, and EPF's internal data is used to verify this. Therefore, no supporting documents are required for the application.
Category 2 is for members who experience a reduction in their income. And there is no way for EPF to confirm this without supporting documents.
EPF can only detect a reduction in the basic salary (through contributions) of the members, but it cannot detect a reduction in allowances and overtime payment.
As each member's situation is unique, Category 2 provides the opportunity for EPF to consider these situations based on their supporting documents. Members just need to submit their application online.
Q: Why didn't EPF introduce blanket or auto approval for contributors, who have also applied under i-Lestari, for the i-Sinar facility?
A: The situations when EPF rolled out the i-Lestari and i-Sinar facilities are very different.
The country was in a different situation then compared with now. Economic activity basically halted for those months (starting from March).
And now, the economy is almost back to normal and most employees have returned to work.
Even so, EPF understands the economic situation is different among members depending on the sector or industry they are working in, and i-Sinar will be available to assist them.
Q: Some members did not suffer a 30 per cent reduction (in their income), but they need cash to sustain their livelihood during this pandemic, especially those from the B40 and M40 groups. Will EPF consider applications from these groups for the
i-Sinar facility?
A: There is latitude under Category 2 to consider applications from members who are affected by the pandemic.
If you have suffered a reduction in income or salary, and have the supporting documents to prove it, you are encouraged to submit an application on Jan 11.
EPF will consider your application.
This is to ensure that the door is not closed and to provide an opportunity for as many members as possible to apply for i-Sinar, which is estimated to reach up to some eight million contributors.
Q: Why was the six-month staggered payment set as the payment mechanism when members need their money fast?
A: EPF wants to ensure that members are assisted for as long as possible. It understands that the first month is important for members to cover their liabilities and beginning-of-the-year expenses such as children's schooling.
As such, the staggered approach in payment is based on a few criteria, including data on liabilities of EPF members, the need to spread out the period of assistance due to the uncertainty of the pandemic, and to balance the cashflow and current investments of EPF
The first payment will be up to RM5,000 (for those with an Account 1 balance of RM100,000 and below) as we understand that more expenses are needed at the beginning of the year for school fees and others.
It must be remembered that i-Sinar needs to be looked at in a holistic context given the assistance introduced under the previous economic stimulus packages, which are intended to reduce the cashflow burden and liabilities of individuals and households.
For example, the payment for Bantuan Prihatin Nasional 2.0 will be given in January and banks' lending assistance, such as moratorium and reduced instalments, are available to benefit members.
Q: Since members are in need of immediate cash, will EPF consider shortening the processing time for the application of the facility? Is there an online application to reduce the number of people going to the branches?
A: For those in Category 1, EPF has expedited the application process via auto-approval using internal data.
They are expected to receive their first payment in the middle of next month.
For contributors under Category 2, EPF estimates that the processing time will be between two and three weeks from the date of application to allow document verification and case-by-case evaluation.
They are expected to receive their first payment by the end of February.
Members are required to apply online and before doing so, they must ensure their i-Akaun is active, their phone number is updated to receive a TAC number (at EPF counters or kiosks), and their bank account number is active.
Q: What is the replenishment method for i-Sinar?
A: For members who apply for i-Sinar, all future contributions will be channelled to their Account 1 until the amount withdrawn is replenished. Once the amount is replenished, contributions will revert to the original ratio of 70:30 in Accounts 1 and 2.
Q: Can action be taken against employers who refuse to cooperate and facilitate their employees' i-Sinar application?
A: EPF will ensure that action is taken against employers who refuse to cooperate to facilitate i-Sinar applications for contributors.
Q: What is the impact of i-Sinar on EPF's financial health?
A: Guided by our strategic asset allocation, our investments have proven to be resilient despite the unique challenges that the market faced during the economic slowdown.
EPF has been diversifying its investments across domestic and global markets, taking into consideration its need to have sufficient cash flow at all times, and this includes extreme times like the pandemic.
Fundamentally, EPF is a long-term investor and every investment decision made will continue to take into account its responsibility to sustain members' funds, even in unprecedented situations like this pandemic.
At the moment, guided by i-Sinar's structure, EPF's actions will ensure that there is no impact on the domestic market.
Q: What is the impact of i-Sinar on members' retirement? What is EPF's advice to contributors applying for the facility?
A: While EPF understands the need for members to withdraw their savings to survive these difficult times, we hope members can plan how much is needed so that they can fulfil the current needs, while minimising the impact on their retirement.
EPF encourages members to consult our Retirement Advisory Services officers for guidance on their finances and rebuilding their nest egg for retirement.