All new contributions to the Employee's Provident Fund (EPF) will be placed into Account 1 to replenish the savings of members withdrawn to cushion the impact of COVID-19, the Parliament was told today.

Deputy Finance Minister Mohd Shahar Abdullah said that a total of RM101 billion had been withdrawn by members under the i-Lestari, i-Sinar, and i-Citra schemes, which were part of the government's stimulus packages.

Once the withdrawn amount has been replaced, the system will revert to the original saving 70% in Account 1, and 30% in Account 2, Free Malaysia Today (FMT) quoted Mohd Shahar replying in an additional question from Che Abdullah Mat Nawi (PAS-Tumpat) who had asked about the government's measures to increase savings in Account 1 of EPF members, in Dewan Rakyat.

It is worth noting that money in Account 1 can only be withdrawn upon a member's retirement, whereas money in Account 2 can be withdrawn for various reasons, including housing, education, and medical expenses.

Mohd Shahar also noted that the EPF's investment portfolio had not been affected by the RM101 bil in withdrawals.

It was recently reported that about 3.6 million EPF contributors have less than RM1,000 in their respective accounts.

More than 4.4 million (54%) of bumiputera contributors have less than RM10,000 in savings to last their twilight years, while two million of them (25%) have less than RM1,000 in their accounts.

This is followed by the Chinese (13 per cent), and Indians (seven per cent), who have below RM10,000 in their accounts.

It is estimated that an individual has to work another four to six years to rebuild the depleted savings nest.

Source: FMT
Photo source: Astro Awani