Malaysia’s restructured national pension fund allows for early withdrawals; experts say ‘delicate’ balance needed

Malaysia’s restructured national pension fund allows for early withdrawals; experts say ‘delicate’ balance needed

“CROWD- PLEASING POLITICAL OBJECTIVE”&nbsp,

EPF users now have three balances, up from the previous two, thanks to the recently reorganized program. &nbsp,

A person’s monthly contributions will now be divided into Account 1, 15 %, and Account 3’s new flexible account, where they will make up the remaining 10 %.

Recently, 70 per share of the achievements were deposited into Account 1 and 30 per cent into Account 2. Account 1 resources may be withdrawn until a associate reaches the age of 55, while Account 2 money can be used to withdraw for purposes like cover. &nbsp,

There are two apparent goals behind the EPF’s decision, according to senior fellow at the Singapore Institute of International Affairs, Oh Ei Sun, who is also looking to offer individuals some flexibility in how they use their money. &nbsp,

Dr. Oh claimed that the higher cash planning to Account 1 makes it possible for EPF to “lock up” an additional 5 % over the long term, increasing its money supply and profitability. &nbsp,

As of December last month, EPF had 16.07 million users, of which 8.52 million are active members. This represents 50 per cent of Malaysia’s 17.03 million workers power as at the end of 2023.

The EPF- one of the world’s largest pension funds – has resources for RM1.135 trillion. &nbsp,

“( The change ) serves two objectives at the same time. The first is a monetary gain for EPF members, while the second is a political gain for the organization, according to Dr. Oh, who cited the decision to give members more freedom when using their Account deposits. &nbsp,

He thinks the opposition coalition’s stress to allow additional EPF transactions was a contributing factor. &nbsp, &nbsp, &nbsp, &nbsp,

Between 2020 and 2022, through four sessions of COVID- 19 payments, 8.1 million Malay took RM145 billion out of the pension fund. When Muhyiddin Yassin, the nation’s then-prime minister, approved the payments, they remained in place under the authority of Mr. Ismail Sabri Yaakob.

Muhyiddin is currently the leader of the opposition coalition Perikatan Nasional, which includes the Malay nationalist Parti Pribumi Bersatu Malaysia ( Bersatu) and the Islamist party Parti Islam Se-Malaysia ( PAS ). &nbsp,

Muhyiddin had urged the government to help another round of Fund payments for those in need following the 15th general election in November 2022. &nbsp,

Nevertheless, Prime Minister Anwar Ibrahim had previously stated in May last year that donors ‘ discounts must be protected so that they can use it for a long-term purpose.

According to him, “EPF is a lawful body that is there to defend participants ‘ money now and for the coming,” he was quoted as saying by the News Straits Times.

Mr. Anwar later appeared to had changed his mind about the government’s plan to introduce a versatile Fund bill that would allow participants to access the funds inside at any time during the 2024 Budget’s release in October.