Employees Provident Fund (EPF) contributors need not worry about the fund selling some assets to meet its i-Sinar withdrawal obligations, two economists said.
Sunway University economics professor Yeah Kim Leng said EPF has a huge investment in liquid assets which can be used.
Furthermore, it also receives contributions from its members amounting to RM2 billion a month, he said.
“As EPF has huge liquid assets, it will not suffer losses if people decide to make withdrawals. The fund will not be forced to sell its long-term investment assets to meet its i-Sinar obligations.”
Yeah added that the withdrawals will not have a huge impact on EPF’s performance
He said that many people are looking forward to EPF’s dividend announcement before they make a decision.
“Not everyone will be withdrawing their money just because they can do so,” he said, adding that a sizeable portion of withdrawals could be for investment purposes.
Yeah said for many, the dividends provided by EPF will benefit them over the long-term and they will be careful when deciding whether to take out money from the fund.
He said those who are thinking of making withdrawals for investment purposes need to carefully weigh the benefits.
Last week, the government announced that it would allow i-Sinar withdrawals without conditions. EPF’s overall investment assets stood at RM924.75 billion as of Dec 31, 2019.
For 2019, EPF reported a gross investment income of RM50.29 billion.
Asli Centre for Public Policy economist and chairman Tan Sri Ramon Navaratnam said the government had made the right decision in removing conditions.
“Many people are suffering economic hardships and this will help them pay off their debts and other loan obligations,” he said.
Ramon added that one thing the government needs to ensure is that there is no abuse of withdrawals.
“The government has to carefully balance the needs of the people during these difficult times and protect their savings.
“People should not be allowed to suffer if they can access funds that can help them overcome their problems.”
Ramon said the downside of this easier withdrawal scheme is that the government may face difficulties in borrowing from EPF.
He said EPF’s capacity to provide funds to the government would be greatly reduced because of its i-Sinar obligations.