How Does Withdrawing Money With EPF i-Sinar Work?

How Does Withdrawing Money With EPF i-Sinar Work?

UPDATE
The i-Sinar programme is now expanded to allow more members who have lost their jobs or whose pay were affected, to withdraw their money from Account 1. All members who lost their jobs or affected by pay cuts whether they are self employed, active or non-active members are allowed to apply.

Members can now withdraw up to RM10,000 if they have less than RM90,000 in Account 1.

Applications will begin from mid-December 2020 and the money will be paid out starting 1 month after the application is approved.

Over two million Malaysians will be able to apply to withdraw funds from their Employee’s Provident Fund (EPF) Account 1 from next month under the EPF i-Sinar programme. The idea is that this will help those who have been impacted by the prolonged pandemic to make ends meet.

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However, it is important to note that this is not a withdrawal. EPF considers this an advance on your future retirement payments and expects you to replace the funds that you have received.

If this is something that you think you may need, then here’s how it works.

How much can you get?

In general, you have access to 10% of your total Account 1 savings – as long as you maintain a minimum balance of RM100. However, the actual amount is determined by how much you actually have in your account.

Your advance will be staggered over a period of six months, with the first amount being credited into your bank account at the end of the month following your application. For example, if you apply for i-Sinar in December 2020, you will receive the first advance at the end of January 2021

You will also have the option to front load your withdrawals by taking a bigger lump sum at the start. The amount that you can withdraw in your first month also depends on your savings. Here’s an example of how it works:

Savings below RM90,000
Savings above RM90,000
Maximum advance
RM9,000
Maximum advance
10% of total savings
(up to RM60,000)
First month advance
up to RM4,000
First month advance
up to RM10,000

Who is eligible?

EPF i-Sinar applies to contributors who have:

  • lost their jobs;
  • have been put on unpaid leave;
  • or have no other source of income.

This situation must have occurred due to the COVID-19 pandemic and subsequent movement control orders.

Update March 9, 2021

The EPF has removed all conditions for making a withdrawal application under the i-Sinar programme.

When can you start?

Applications for EPF i-Sinar will begin in December 2020. The EPF has set an end date for applications on June 31, 2021.

Do you have to pay it back?

In a manner of speaking, yes. While you do not have to directly give the money back, it will affect your future EPF contributions. What happens is that 100% of your future contributions will be deposited into Account 1 until you replace the amount that you received under i-Sinar (as opposed to only 70% being deposited into Account 1 and the remainder 30% going to Account 2).

The effect of this is that you may have less in your Account 2 in the long run. This may impact you if you plan to make withdrawals for education or to buy a house in the future.

You should also take note that the minimum EPF contribution for 2021 is being reduced to 9% under the recent Budget 2021 proposal. This means that you will be returning substantially less than the previous 11% contribution, in addition to the 7% contribution rate that was introduced from April to December 2020.

Should you take the i-Sinar advance?

If you have lost your job and are struggling not only to pay the bills but in danger of losing your home or losing your insurance coverage, then this is definitely something you should consider. After all, your future is somewhat less important than surviving the present. That said, you should carefully consider just how much you need and avoid taking too much out of your EPF account (because you will be replacing it).

However, if you have emergency savings (which we recommend) then it is better to avoid touching your EPF funds. Those savings are meant for times like this, and you should not hesitate to use them first.

In this case, it is more important to leave your EPF funds alone if you can afford it. Emergency savings are for emergencies like now, the EPF money is saving for your future retirement (and your future self will thank you for it).

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