SINGAPORE: Malaysians have withdrawn some RM7.81 billion ( US$ 1.66 billion ) from their retirement savings following the restructuring of the country’s national pension fund in May.
The most recent figures, taken as of Jun 24, showed a decrease from the RM6.98 billion that was already taken out as of Jun 10.
The New Straits Times reported on Wednesday ( Jul 10 ) that some 3.16 million Employees Provident Fund ( EPF ) members under the age of 55 had made such withdrawals from their “flexible” account.
EPF– which is Malaysia’s pension fund – is one of the nation’s largest pension funds, with assets for RM1.19 trillion. Following a restructuring plan that became effective on May 11, the organization made it possible for its members to take cash out of this account to pay for their immediate financial needs.
CNA has recently reported that there have been mixed responses to the restructuring of the EPF, with some experts putting the risk that the move will lead to a future pensions crisis.
There was also issue that people ‘ early payments might even miss out on the pocketbook scheme’s compounding factor.
Others have claimed that the shift gives users some choice about how they use their money while others have said otherwise.
Recently, EPF people who had not reached the age of 55 could simply make payments for certain specific reasons. However, EPF people under the age of 55 then have three balances in place of the past two following the reform program in May.
Under this restructured program, 75 per cent of an individual’s regular commitment will now go into Account 1, 15 per cent into Account 2 and the remaining 10 per share will go into Account 3- the fresh flexible accounts.
Recently, 70 per share of the achievements were deposited into Account 1 and 30 per cent into Account 2. Money from Account 1 can only be withdrawn for purposes like cover, care, and training, and cannot be withdrawn until a associate reaches the age of 55.
EPF people have until August 31 to move a third of their savings from Account 2 to Account 3.
The Finance Ministry reported to the New Straits Times that 3.61 million people, or 27.8 % of EPF members overall under the age of 55, have transferred funds to Account 3.
To date, some RM11.52 billion has been moved to the accommodating accounts that can be readily tapped.
However, RM5.12 billion was transferred to Account 1 with the reform of the EPF resources.