Economists: EPF’s new withdrawal option will ease cost of living
KUALA LUMPUR: Economists have lauded the Employees Provident Fund’s (EPF) enhancement policies to enable members aged 55 to 60 to make partial withdrawals of any amount at any time, effective Jan 1.
Sunway University Business School economics professor Dr Yeah Kim Leng told NST Business that the enhancement would ease the cost of living, providing flexibility for EPF contributors.
“Most importantly, contributors have to use it to meet the objective of their retirement savings.
“They should not spend on items that do not contribute to the funding of their post-retirement savings.”
He said the flexibility was supposed to help contributors ease the cost of living without impairing their post-retirement funds.
“However, too much withdrawal flexibility to the extent of exhausting their savings would not be good.
“They need adequate savings to cover their cost of living for the rest of post-retirement,” he said, adding that this was a risk for individuals, which could affect the government, as well as the economy.
He said the greater flexibility allowed contributors to meet their immediate needs, especially at certain ages where they could withdraw for children’s education, medical costs and investments.
“All this flexibility would help to enhance the quality of contributors’ life, but, most importantly, their remaining funds should be adequate for future use.
“If not, they may face social issues.”
MIDF Research chief economist Dr Kamaruddin Mohd Nor said EPF’s enhancement policy provided members the benefits intended for their post-retirement.
“I think the measures to make the withdrawal procedures more flexible are most welcome.
“However, it is only applicable for those who have reached a certain age.”
He said the new policy would not have much impact in increasing members’ savings in the long term.
“It is more to ease members’ withdrawal flexibility.
“If you reach a certain age between 55 and 60, you are allowed to withdraw your savings.”
He said there would be no issues with this new policy as it was to enhance the current operational procedures.
“It is most beneficial for those who have reached their retirement age to have the withdrawal flexibility.
“At the end of the day, it is meant to serve members who are at retirement age.”