]KUALA LUMPUR: Having the government allow more Employees Provident Fund (EPF) withdrawals is no longer a feasible solution to help all its contributors.
Putra Business School Master of Business Administration Programme director Associate Professor Dr Ahmed Razman Abdul Latiff said: "I don't think it's a feasible idea since a majority of EPF contributors who need help no longer have sufficient savings to withdraw.
"Only those who have been working for many years may be able to withdraw, but they are not necessarily the ones who need help.
"This will help only a minority of contributors without benefiting the majority of those who really need financial help," he told the New Sunday Times.
Razman said to address the financial woes of those impacted by Covid-19, the government could look into providing cash aid as a short-term measure.
"This should target those who are in need of financial aid and must not cause them to have low retirement savings."
On Jan 22, former prime minister Datuk Seri Ismail Sabri Yaakob said groups that were vocal about having EPF withdrawals during his administration should speak up now if they wanted it to be done again.
He said people had told him that they needed to withdraw from their EPF savings because they could not make ends meet.
Dr Geoffrey Williams, an economist of Malaysia University of Science and Technology, said it was reasonable that those who supported EPF withdrawals in the past should oppose them now because the economic situation was different.
"The idea of having further EPF withdrawals is a terrible one.
"The earlier withdrawals of RM145 billion and lower employee contributions of RM10 billion have left millions of people without retirement savings.
"According to the EPF, 73 per cent of its active contributors have inadequate savings and 84 per cent of all members have inadequate savings to meet poverty-level pensions, while 96 per cent have too little to guarantee a decent living wage-level pension.
"Around 50 per cent of members, or six million people, have critically low savings below RM10,000 and 2.6 million have less than RM1,000," he said.
Williams said there were wider implications if similar withdrawals as the last time were allowed.
He worried that the total withdrawals from the EPF could reach RM200 billion, or 20 per cent of its fund size.
"Instead of having an EPF with RM1.15 trillion or more, the fund could be reduced to around RM1 trillion.
"This can cause lower returns for members, making it hard for EPF to maintain a six per cent dividend.
"For the wider population, pumping RM45 billion into the economy will cause inflation and higher interest rates."
Williams said Malaysia needed to reform the welfare and incomes system, including pensions, for the long-term security of its citizens.