One of the grey areas has been clarified by the authorities regarding the mechanism on the EPF monthly withdrawal for reducing housing loans initiative proposed during last Friday’s 2008 Malaysia Budget. Today it was clarified that the said withdrawal will be credited directly into the contributor’s personal bank account and not to the lending bank. Second Finance Minister Nor Mohamed Yakcop said the money could be used to either help offset the housing loan installment or for the contributor to afford a bigger or more expensive house.
Supposing you’re earning RM3000 per month, then:
- Employee’s EPF deduction of 11% = RM330
- Employer’s EPF deduction of 12% = RM360
- Total deduction from above = RM690
- Account 2 (30% of total deduction) = RM207
The total contributed into account-2 (RM207 in above example) will be made available at your disposal since that same amount will be credited into your “personal bank account”. It was further clarified that 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 only condition is for the contributor to provide proof of his / her housing loan, fair enough. Compare to the previous option where contributors were allowed to withdraw money from EPF to buy computers (some creative contributors bought fake computer slips instead), this time the abuse is minimal. However it is hope that the EPF officers will be briefed in order for the processing procedure to be a smooth as possible.
However there’re concerns that contributors who are eligible to do so might use the money for something else. It’s human nature that when they see extra money in their banking account, their hands got itchy and use it to buy anything but paying the intended housing loan. Hence there’re people who think it’s best to credit the money into the door of financial institution instead.
Eventually it boils down to the discipline of the contributors (but how many has it?). Since it’s their own money, they should be wise enough to decide whether to do the right thing or to screw up the thing. Personally I think this is a great move simply because it’ll reduce the total cost of owning your sweet home, without which the amount you paid at the end of the 20-year (for example) loan period will be much much more than what you earned from the pathetic annual dividends declared by EPF should you chose to instead keep it with EPF.
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September 12th, 2007 by financetwitter
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