PETALING JAYA: Former Prime Minister Najib Razak said that raising contribution rates and investing in more profitable projects will help the Employees Provident Fund (EPF) to recover its reserves if people are allowed to withdraw from their Account 1.
Disagreeing with reports which said that the potential withdrawals would severely affect the economy and burden pensioners in the future, Najib said that allowing Account 1 withdrawals would not mean the funds could not be replenished in the future.
“This can be done in two ways. Raise the monthly statutory contribution rate of employers and employees in the future when the economy recovers after the Covid-19 crisis,” he said on his Facebook page.
“These contribution rates are often lowered when the economy needs an injection.
“This was also implemented in February when the employees’ statutory contribution rate was lowered from 11% to 7%,” he said, adding that increasing the contribution rate when the pandemic subsides would allow people to restore their EPF savings.
He said the second method was for the government to generate more profits for EPF members through more lucrative projects.
Najib cited projects under his Barisan Nasional government such as Kwasa Damansara and the Battersea Power Station project in London as examples of such investments.
He said many “crony” property developers had protested when 2,800 acres of Malaysian Rubber Board land was sold to EPF for RM2.28 billion without a tender. However, EPF now had a project with a development value of RM50 billion, with the Kwasa Damansara project and two MRT stations built there.
Najib said the collective amount which could be withdrawn from Account 1 would amount to RM45.7 billion if each of the 4.57 million contributors were allowed to withdraw RM10,000.
The total amount was the equivalent of only 4.9% of the EPF’s RM929.64 billion total assets as at June 30 this year, he said.
Najib had previously suggested that the government allow withdrawals from Account 1. However, Prime Minister Muhyiddin Yassin said such withdrawals would lead to “bigger problems” later for EPF contributors.
The money in Account 1 is supposed to be used after retirement by EPF contributors. EPF members usually use their Account 2 to reduce their housing loan repayment to save on their interest. Others also depend on it for their tertiary education and medical needs.
However, in March this year, the government announced that some 12 million Malaysians will be allowed to withdraw RM500 monthly from their EPF Account 2 for the next one year, as part of measures to help the public cope with the financial impact of the Covid-19 restrictions.
