Posted by: Mofie Augustine | September 25, 2007

EPF withdrawals to go into members’ bank accounts

KUALA LUMPUR : The EPF monthly withdrawal for reducing housing loans will
be credited directly into the contributor’ s personal bank account and not
to the lending bank.

Second Finance Minister Tan Sri Nor Mohamed Yakcop said the money could
then be used to either help offset the housing loan instalment or for the
contributor to afford a bigger or more expensive house.

“It is a simple mechanism. For instance, let’s say your monthly salary is
RM2,000, 30% of your EPF contribution will go to Account 2.

Your monthly housing loan repayment is now RM500 and you can use RM138 to
offset the housing loan instalment. The RM138 will be credited to your bank
account every month.

“In another situation, you are thinking of buying a house, but you can only
afford to pay RM400 a month. With RM138 withdrawn monthly from EPF, you can
afford to buy a bigger house and pay RM538 monthly,” he said.

He said contributors needed to go to the EPF to apply for the monthly
withdrawal only once, and it would directly credit the money to their
personal account every month.

“The condition is that the contributors must have a housing loan,” he

Nor Mohamed said the RM9.6bil that would be taken away from the EPF to be
put into the contributors’ pockets every year was good for consumption- led

On worries that the monthly withdrawal would be subject to abuse like the
EPF computer withdrawal scheme that was a flop, he said: “Let them use the
money. It is all right. The money is in their pocket. But they must have a
housing loan.”

“There are no worries. For the computer scheme in the past, some
contributors bought computer slips rather than computers.

“In this case, there is no downside. They cannot cheat. We can check with
the bank if they have a housing loan. A person who doesn’t have a housing
loan won’t be able to withdraw his savings from Account 2,” he added.

Nor Mohamed was asked to elaborate on the EPF Account 2 withdrawal scheme
for monthly housing loan repayments after delivering his keynote address at
the Malaysian Newspaper Publishers Association’ s seminar titled “Making
Sense of The Media Collusion” here yesterday.

Last Friday, Prime Minister Datuk Seri Abdullah Ahmad Badawi, when
unveiling Budget 2008, announced that the Government would allow EPF
contributors to make monthly withdrawals from their Account 2 balances to
pay off their housing loans from Jan 1.

He said the move would benefit five million active EPF contributors.

He said it would also enable them to own better houses and lessen their
monthly financial obligations.

Nor Mohamed said if there was a change in the loan status, the bank could
let the EPF know about it.

The EPF said it would announce further details on the matter in December.



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