No Additional EPF Targeted Withdrawal, Help You Save Money For Retirement
The median savings among ethnic Bumiputeras are very low, prompting questions whether the government will introduce further targeted withdrawals for those in need.
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On 1 March, the Employee’s Provident Fund (EPF) announced an exceptional performance with a 6.3% dividend rate for both conventional and syariah savings in 2024. This is good news because it’s the highest we’ve gotten since 2017. Woohoo!
READ MORE: It Pays To Save! EPF Contributors Have 6.3% More Reason To Smile
Now that things have calmed down, it was noted during the Dewan Rakyat meeting yesterday that the government will not force Muslim contributors to save in Syariah-compliant EPF accounts, keeping the option open for them.
The government shared that the dividend rates for both account types are the same; there’s no financial disadvantage for either savings option.
It is hoped that the current favourable returns, combined with additional encouragement and clear explanations regarding banking matters, will motivate Muslims to contribute to their EPF savings.
Low savings among ethnic Bumiputeras
However, another matter has also been brought up: EPF savings among the ethnic Bumiputera contributors are still very low with a median EPF savings of just RM8,920 as of December 2024!
This prompted Padang Terap MP Nurul Amin Hamis to ask whether the government would consider introducing targeted withdrawals to help those facing unemployment, debt and rising living costs.
Prime Minister Datuk Seri Anwar Ibrahim understood the concerns raised but reiterated that the government has no plans to introduce further targeted withdrawals for EPF contributors.
The previous change to the EPF savings system introduced Account 3 aka Akaun Fleksibel, allowing contributors to withdraw money at any time.
READ MORE: Ready For EPF’s Account 3? Initial Amount Transfer Will Go Live 12 May
Anwar explained that EPF savings are meant for use during retirement and introducing additional withdrawals will affect contributors, especially those with already low savings, years down the road.
He said the government has to strike a balance between helping people to save for retirement and solving the urgent financial issue.
READ MORE: Should You Withdraw From Account 3? Here Are Some Things To Consider Long Term
However, Anwar said special exemptions are given in serious cases requiring an urgent withdrawal. In these circumstances, EPF will try to give due consideration.
There’s also a proposal to provide a 2% mandatory EPF contribution for foreign workers. Anwar said the decision will not affect EPF’s focus on citizens’ retirement savings.
The aim of giving mandatory contributions to foreign workers is to improve wage equity and close the wage gap between local and foreign workers.
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