EPF members can access 10% of Account 1

The i-Sinar facility will cover active members who have lost their jobs, given no-pay leave, or have no other source of income


THE Employees Provident Fund (EPF) has announced that two million of its affected members will be able to advance up to 10% from their savings in Account 1, allowing them to tap into their retirement savings to buffer the economic impacts of the Covid-19 pandemic.

EPF CEO Tunku Alizakri Raja Muhammad Alias told reporters at a special briefing in Kuala Lumpur yesterday that the i-Sinar facility will cover active members who have lost their jobs, given no-pay leave, or have no other source of income.

“We had to make a hard decision. We have to assist as many people as possible by providing supplement funds for those affected to survive the present crisis, but also ensure there are some savings for their retirement.

“This is an advancement, not a withdrawal. It means you are borrowing from yourself, and when you borrow, you have a requirement to replenish it,” Tunku Alizakri said.

Unlike the i-Lestari facility announced in April, which involves withdrawals from Account 2, the i-Sinar facility allows only affected members to advance up to 10% of their savings in Account 1, with eligibility limited to those whose incomes have been severely affected.

Tunku Alizakri said the facility is open only to EPF members who have not made any contribution for two months. “Taking cues from i-Lestari, we found that some members didn’t need the facility. They took out the money when they don’t need it, so we have to define the parameters.

“The criterion is, you don’t have any contribution for two consecutive months. So, for people with pay cuts, we think they still have some form of a safety net (so they are not eligible). We are really going for people with no safety nets,” he added.

Eligible members can start applying from December 2020, with the first crediting to take place by end-January 2021. The announcement came two days ahead of schedule, with full details of the facility expected to be provided tomorrow.

Those with savings of RM90,000 and below in their Account 1 have access to advance any amount up to RM9,000. The amount advanced will be staggered over a period of six months, with an increased first advance of up to RM4,000.

For those with savings of above RM90,000 in their Account 1, they have access to advance up to 10% of their savings, with the maximum amount allowed set at RM60,000. The amount advanced will be staggered over a period of six months with an increased first advance of up to RM10,000.

Members who choose to apply for the i-Sinar facility will be required to replace the full amount advanced. All future contributions will be 100% credited to Account 1 until such time that the amount advanced is replenished. Thereafter, contributions will revert to the 70:30 standard distribution for Accounts 1 and 2 respectively.

“We want people to know that there is no free lunch. Everything we do has an implication, has a trade-off. For every amount we allow access to, it means there is less money for us to invest in. This is an unprecedented time where we can invest in high-quality assets.

“But when the money is not available, we will lose these opportunities to invest. So, the decisions we make for affected members will also have implications for members not affected (by the pandemic),” Tunku Alizakri said.

The EPF estimates that the financial implication from its handling of the pandemic, inclusive of the two facilities and reduction in contribution rates, ranges from RM50 billion to RM60 billion.

Meanwhile, Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said the i-Sinar programme is a continuation of the i-Lestari programme which was first launched by the EPF in March.

“i-Sinar is the result of several discussion sessions that have been held with the government to refine and improve initiatives on targeted withdrawal of Account 1,” Tengku Zafrul said in a statement.

“Overall, the value of the EPF ini tiative to help the survival of the people for the years 2020-2021 is amounting to RM61 billion,” he added.

The minister also said the fund has guaranteed that efforts will continue in order to fulfil the mandate to its members, which is to strengthen the social protection network through investment and further strategic development.

Read our earlier report here