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Implications of EPF Act on withdrawals

Leaders have voiced their concern over a spate of withdrawals – but it was their administration that put in place the legal provisions that allowed them.

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I wonder how it was possible for the i-Sinar, i-Lestari and i-Citra Employees Provident Fund withdrawal schemes to be permitted, given the limited franchise of withdrawals allowed under the EPF Act 1991.

From what I understand, EPF withdrawals were only allowed for contingencies such as the purchase of a house, education and medical treatment, and upon retirement.

The EPF Act 1991 has the following clauses under Section 54(6):

  • (k) – the member of the fund requires financing for the purpose of sustainable living (Ins. PU(A) 135/2020)
  • (l) – the member of the fund requires financing to increase his income for the purpose of survival (Ins. PU(A) 389/2020)
  • (m) – the member of the fund requires financing to increase his income for the purposes of continuance of life due to the implementation of the national recovery plan under the Prevention and Control of Infectious Diseases Act, 1988 to control or prevent the spread of Covid (Ins. PU(A) 306/2021)

As a lay person, my understanding of these provisions is that EPF members can apply to withdraw a part of their savings at any time as long as they can satisfy the requirements of these provisions.

As long as their applications meet the stipulated requirements, the EPF would be under an obligation to allow their requests for withdrawal, given the broad provisions of Section 54(6)(k)(l) and (m).

With these provisions, EPF members have a right to these withdrawals from their savings, though such withdrawals ought to be discouraged as they would deplete the members’ retirement savings.

Nevertheless, the option to seek a withdrawal from EPF savings remains with the EPF contributors.

READ MORE:  Ageing population heightens need for retirement safety net

That said, the prime minister and finance minister have voiced their disagreement on allowing further withdrawals from the EPF.

Having elected, in the first place, to put in place such provisions – ostensibly to allow EPF members to avail themselves to their retirement savings to tide them over their present financial constraints – the prime minister and finance minister are now hilariously postulating as custodians of the workers’ EPF savings. But it was their administration that caused the introduction of subclauses (k), (l) and (m) to Section 54(6) of the EPF Act.

Obviously, therefore, the EPF is under a legal obligation to entertain such requests for withdrawal, subject to the conditions set out under these subclauses, as long as these provisions remain in the statute.

K Veeriah is a veteran trade unionist based in Bukit Mertajam, Penang

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24 Jan 2022 9.02am

Stop commenting on withdrawals as some need to use the money. If you don’t agree, no one forced you to withdraw. Don’t want to keep my money in EPF longer than i have to. Don’t want to give EPF any excuse to hold my money until 65 by extending the retirement age and pushing the withdrawal age. It’s a piggy bank for the govt… 400 billion loaned to MAS, buy Felda IOP, donated 10 mil to flood victims etc…

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