On 16 March 2022, the Employees Provident Fund (EPF) announced a special withdrawal facility of RM10,000 to be opened to members below age 55.
This is the fourth special withdrawal offered to EPF members since the start of the COVID-19 pandemic in March 2020. Nevertheless, Prime Minister Dato’ Sri Ismail Sabri bin Yaakob noted that there were still Malaysians that have lost their income and are trying to rebuild their lives.
How Do You Access the RM10,000 Special Withdrawal?
Members that want to withdraw their EPF savings under the special withdrawal facility can do so via the pengeluarankhas.kwsp.gov.my portal.
Applications for withdrawal will start from 1 April to 30 April 2022, with payouts starting 20 April.
Here are some of the conditions to take note of before withdrawal:
- The facility is open to members aged 55 and below (including permanent residents and non-citizens).
- Members who have utilised previous special withdrawals (under i-Lestari, i-Sinar and/or i-Citra) are still eligible.
- Members can withdraw a maximum of RM10,000 and a minimum of RM50.
- Payouts will be made to active current or savings bank accounts in members’ own names. Joint accounts or business accounts are not allowed.
Should You Withdraw in the First Place?
Under the special withdrawal scheme, members must leave at least RM100 balance in EPF Account 1. The withdrawal will fully utilise the balance in EPF Account 2 before accessing the balance in Account 1.
Here is an example of how the withdrawal works:
|Scenario 1||Scenario 2||Scenario 3||Scenario 4||Scenario 5|
|Account 2 balance (RM)||20,000||3,000||150||0||49|
|Account 1 balance (RM)||50,000||12,000||3,450||165||99|
|Amount that can be withdrawn||10,000||10,000||3,500||65||Not eligible|
|Amount withdrawn from:|
|Account 2 (RM)||10,000||3,000||150||0||–|
|Account 1 (RM)||0||7,000||3,350||65||–|
When EPF members contribute to the system, the money is split 70% into Account 1 and 30% into Account 2. The reason for the Account 1 and 2 split is the different purposes of each account:
- EPF Account 1 is for retirement and old age purposes.
- EPF Account 2 can be withdrawn for purposes specified by EPF.
As it is, there are several scenarios in which EPF allows partial withdrawal of members’ balance in Account 2. These include:
- To fund own or children’s education.
- To build or to buy a home.
- To perform the hajj.
These are very specific circumstances under which EPF allows for withdrawals, and only from Account 2. As far as is possible, EPF will discourage its members from touching their savings until age 55.
Furthermore, EPF has generated historically high returns, offering dividend rates above 5% each year for its members since 2009. Last year, it generated a 6.1% dividend, an extraordinary feat given the prevailing economic conditions.
Having said that, the COVID-19 pandemic has hit many Malaysians hard, especially those in the lower income bracket. The EPF special withdrawal is meant for them to cover their needs right now, instead of an uncertain 20 or 30 years in the future.
Should You Use the RM10,000 to Buy a Car?
This question is not as straightforward as it seems. Most Malaysians’ instinct would be to leave the RM10,000 in EPF savings for retirement, or withdraw it for immediate relief until the income stream can be rebuilt.
But to buy a car? We recently ran a discussion on our Facebook page, and it generated quite a lot of debate:
Generally, netizens seem to be split into two opinions. One is of course not to touch your EPF savings at all.
Another body of opinion is to use the money for a vehicle that generates income.
Who is right and who is wrong? It’s difficult to tell. If the car can be used to generate income for those in dire need (e.g. used as a food van or for ride-hailing), then it is probably a good investment. Otherwise, you’ll be saddled with a depreciating asset that also requires regular maintenance to run.
Another factor to consider is age. If you’re on the younger side, say 30 years old, you will have time on your side to earn back the RM10,000. On the other hand, if you’re approaching 55, you may want to hold off on the emergency withdrawal.
But at the end of the day, the money is yours, and no one can know your circumstances better than yourself. Whatever you need the money for, we trust you to exercise good judgment.
The only thing we would like to remind everyone is to be vigilant of scams. There are many scammers out there waiting to relieve you of your hard-earned money. EPF has published countless cautions to be aware of suspicious emails, calls and messages. With regards to the special withdrawal facility, EPF has cautioned its members to be aware of suspicious social media links. EPF has not appointed any third party to manage the special withdrawal facility.
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