EPF withdrawal to settle debts a bad idea
14/03/2007 The Star
By NIK AFFENDI JAAFAR, Senior Manager, Public Relations, Employees Provident Fund.

WE REFER to the letter in Allow use of EPF savings to settle debts dated March 11 regarding the use of EPF funds to settle debts.

While we sympathise with the member’s financial problem, the Employees Provident Fund (EPF) has to adhere to its main role and responsibilities to manage the retirement savings of its members, including the type of withdrawals made as governed under the EPF Act, 1991.

Members are allowed to make certain pre-retirement withdrawals such as for housing, health, education and when they reached the age of 50, but the major portion of their savings are kept for their retirement and can only be withdrawn at age 55 and above.

For instance, under housing withdrawals, members can apply yearly to withdraw from their Account 2 to reduce their housing loans, subject to certain conditions and assuming there are sufficient savings in Account 2.

With the average lifespan of Malaysians increasing, members’ savings in the EPF may no longer be sufficient to support post-retirement needs. Members need to be aware that it will be to their disadvantage if their EPF funds are used for other purposes.

To help increase retirement savings, early this year the EPF restructured its members’ accounts whereby 70% of contributions will be kept in Account 1 for their retirement fund and the remaining 30% in Account 2 for pre-retirement withdrawals.

The EPF is not in the position to consider any withdrawal proposals that does not meet the objectives of the EPF.