Malaysian Prime Minister Muhyiddin Yassin announced yet another early withdrawal facility from Employees Provident Fund retirement accounts as part of an emergency package for Malaysian workers facing continued coronavirus lockdowns.
The new i-Citra withdrawal facility will allow up to 12.4 million EPF participants under the age of 55 to withdraw a total of 5,000 ringgit ($1,203) — or 1,000 ringgit a month over a five-month period — from their retirement savings in the national defined contribution system beginning in July.
I-Citra is the third EPF early withdrawal facility offered up since the global pandemic struck in the first quarter of 2020.
Withdrawals under the i-Lestari program announced in March 2020, allowing EPF participants to take 500 ringgit a month out from the Account 2 balances usually set aside for non-retirement needs such as housing and education, and the i-Sinar program announced in November, allowing withdrawals of up to 10,000 ringgit from Account 1 retirement balances, have come to roughly 80 billion ringgit so far, government documents show.
With the new facility, total withdrawals by the end of 2021 could come to roughly 120 billion ringgit, government estimates show.
For the three months ended March 31, the EPF reported a 1.8% drop in investment assets to 981.7 billion ringgit, with early withdrawals contributing to the decline.
An EPF news release Monday said the new facility is being introduced "in response to the challenges that EPF members are facing and was developed after careful consideration on how best to assist affected members while upholding the EPF mandate."
"While EPF remains committed to safeguarding members' retirement funds, we acknowledge the need to balance current demands against future needs and facilitate temporary relief for members amid the pandemic," the news release said.
Under the EPF system, 70% of monthly employee and employer contributions to employee accounts go toward Account 1 balances dedicated to retirement savings, while the remaining 30% goes to Account 2 balances, available for a variety of major life expenses such as purchasing a home.
While i-Lestari withdrawals were limited to participants' Account 2 balances and i-Sinar withdrawals were limited to Account 1 balances, the new i-Citra facility will tap both accounts — running through Account 2 balances before tapping Account 1 balances.
