(Image: Bernama)
Prime Minister Datuk Seri Anwar Ibrahim, during the Minister’s Question Time at the Dewan Rakyat sitting yesterday, warned that allowing too much flexibility in withdrawing Employees’ Provident Fund (EPF) savings before retirement could lead to financial problems later in life. He said early withdrawals would leave people with insufficient savings in old age.
Anwar emphasised that for decades, including during his previous tenure as Finance Minister, the policy has been to avoid large withdrawals since EPF savings are meant for retirement. While exceptions have been made for cases of hardship or illness, he stressed the need to balance meeting immediate needs with ensuring enough savings for the future.
“EPF has made it clear that the majority of contributors, especially among the Malays, have very small savings. So, opening up this (early withdrawal) option will cause problems when they retire.”
No Further Targeted EPF Withdrawals
When asked by Nurul Amin Hamid (PN-Padang Terap) if the government would consider introducing targeted withdrawals for those struggling, Anwar confirmed that the federal government has no plans to introduce further targeted withdrawals for EPF contributors.
(Image: EPF)
Citing EPF data, Anwar explained that ethnic Bumiputera contributors have some of the lowest retirement savings, with a median of just RM8,920 as of last December, and to address this, special exemptions are already available for those in critical situations. While broad-based withdrawals won’t be reinstated, EPF will consider appeals on a case-by-case basis based on financial urgency.
Mandatory Shariah Savings Contributions For Muslims
On mandatory Shariah savings for Muslims, Anwar clarified that the government has no plans to enforce it. He highlighted the 6.30% dividend rate for both conventional and Shariah savings — the first time they have been equal since 2017 — as a key milestone.
“This [dividend] record is important because this will further encourage Muslims to contribute. With further encouragement and explanation, it is hopeful the number of contributors will increase.”
EPF Contributions For Foreign Workers
Regarding EPF contributions for foreign workers, Anwar assured that this policy would not affect citizens’ retirement savings. Protecting local workers remains a priority. The 2% mandatory contribution for foreign workers, introduced in Budget 2025, aligns with international labour standards and promotes fair treatment for all workers.
(Image: Bernama)
Finance Minister II Datuk Seri Amir Hamzah Azizan added that this policy aims to improve wage equity and prevent disadvantages for local workers while maintaining EPF’s retirement savings framework.