KUALA LUMPUR, MALAYSIA — The Malaysian federal government will reduce the minimum employee contribution rate for the Employees Provident Fund (EPF) from 11 per cent to 9 per cent for a period of 12 months starting January next year.
Delivering his Budget 2021 speech in the Dewan Rakyat on Friday (6 November), Finance Minister Tengku Zafrul Abdul Aziz said that the reduction aims to increase workers’ take-home salaries.
Members will also be allowed to withdraw their EPF savings from Account 1 “on a targeted basis”.
The amount allowed for such withdrawals will be RM500 a month with a total of up to RM6,000 over a duration of 12 months, said Tengku Zafrul.
Enabling the withdrawal, he explained, may lighten the financial burden of around 600,000 members who may be affected by retrenchments during the COVID-19 pandemic.
The minister noted that the EPF had earlier introduced the i-Lestari withdrawal facility in April this year, which allowed members to withdraw RM500 per month for 12 months with a total of up to RM6,000.
“This facility has benefitted 4.7 million members with a total value of RM11.6 billion,” said Tengku Zafrul, adding that an approximate total of RM4 billion is predicted to be withdrawn from Account 1.
EPF will also allow members to withdraw from their Account 2 to purchase insurance and takaful products approved by the statutory board to provide life and critical illnesses coverage for themselves and their families, he added.
“Insurance has a low penetration rate in Malaysia and it is among factors that undermine the financial security of individuals and families,” he said.