Participants with less than 90,000 ringgit will be able to take out 9,000 ringgit, which could effectively drain the accounts of participants with the lowest retirement savings.
Under the program, an EPF participant with 10,000 ringgit could be left with 1,000 ringgit while a participant with only 4,500 ringgit could end up with only 100 ringgit — the minimum remaining balance allowed.
Participants who put in i-SINAR applications from December can have funds credited to their bank accounts stretched over six months, beginning in January. For those with EPF savings of 90,000 ringgit or less, the program is designed to allow an "increased first advance of up to 4,000 ringgit," the news release said.
"Members who choose to apply for the i-Sinar facility will be required to replace the full amount advanced," the news release said, though it provided no further details.
The new program effectively allows Malaysian workers facing economic distress to double-dip into their retirement savings, at least for the first three months of 2021.
At the height of the coronavirus crisis in early 2020, the EPF introduced its i-Lestari program, allowing participants to withdraw 500 ringgit a month from their account 2 savings.
Designed to stretch from April through March 2021, i-Lestari saw 4.35 million participants withdraw a combined 3.79 billion ringgit in the three months ended June 30, according to the fund's report for the second quarter. Updated numbers couldn't be obtained.
Alizakri Alias, the fund's CEO, painted the decision to offer participants the new withdrawal facility as a tough but necessary decision.
"Allowing members access to their EPF retirement savings other than what is provided for under the EPF Act 1991 is unprecedented and has never been done before," Mr. Alizakri noted in a Nov. 6 statement posted on the EPF website.
"Account 1 (70% of savings) has always been designed for retirement while Account 2 (30% of savings) is meant for discretionary withdrawals. Given the complexity of the situation, it was not an easy decision that could be made in a hurry," he added.
But Mr. Alizakri concluded that the EPF had "found a middle ground to allow members access to their savings without jeopardizing their future retirement."