The Employees Provident Fund (EPF) has finalised the mechanism as well as the terms and conditions for the Account 2 Support Facility following the recent announcement by the Ministry of Finance via its press release dated 21 March 2023.
The Account 2 Support Facility is aimed at helping EPF members apply for personal financing from banking institutions. Savings in EPF Account 2 can only be used to pay for personal financing through an advance application for the Age 50 or Age 55 Conditional Withdrawal, based on existing withdrawals allowed under the EPF Act 1991 (Act). However, this withdrawal is conditional, where the withdrawal payment will only be made to the banking institution when the member reaches the age of 50 to 55, as stipulated in the Act.
The banks will fully administer the application process for personal financing through this facility, subject to their financing assessment and credit framework. The personal financing application can be completed online through participating banking institutions. Before applying, members need to ensure their eligibility in EPF Account 2. The application should be submitted according to the agreed terms and conditions with the banking institution. Once approved, members can submit an initial application for Age 50 or Age 55 Conditional Withdrawal to the EPF based on the approved financing amount.
The Account 2 Support Facility will be implemented in two phases, and members who meet eligibility criteria may apply through participating banks, including MBSB Bank and Bank Simpanan Nasional (BSN). The EPF may consider adding more participating banks in the future.
During Phase 1, which will begin on April 7 and remain open for one year, eligible members who are 40 years of age or older may apply, subject to the readiness of participating banks. The start date for Phase 2 for members under 40 years of age will be announced in due course.
Under the facility, all Malaysian EPF members below age 55 years can submit an advance notice of Age 50 or Age 55 Withdrawal, provided they have a minimum amount of RM3,000 in their EPF Account 2. The maximum financing amount has been fixed at RM50,000, subject to EPF Account 2 balance, with a repayment tenure of up to 10 years.
The interest rate (Conventional) or profit rate (Islamic) to be charged by the participating banks under this programme will range from 4% to 5%, lower and more affordable than the current market rate of 8% to 15%.
This facility is targeted towards EPF members who have savings in Account 2 and are supported with a reasonable income to ensure they can afford the financing and repay it without compromising their retirement income adequacy and security. It offers a practical solution for EPF members who are facing temporary liquidity issues by providing cash flow through personal financing but with minimal impact to their retirement savings.
If a member makes an advance notice for Age 50 Withdrawal, the EPF will pay the principal and accumulated dividend from Account 2 into the member’s financing account with the bank at any age between 50 and 54, as chosen by the member, subject to the maximum tenure of up to 10 years. If the member opts for Age 55 Withdrawal, the EPF will pay the principal and accumulated dividend from Account 2 into the member’s financing account with the bank at age 55. The amount paid will first be used to settle the remaining personal financing balance, if any, before returning any excess to the member.
Savings will remain intact in EPF Account 2 and continue to receive annual EPF dividend, hence allowing members to take advantage of the power of compounding their retirement nest egg, while still addressing their short-term financial needs.
If a member fully settles their personal financing, they can notify the EPF to rescind their advance notice of Age 50 or Age 55 Withdrawal. Once the notice is rescinded, the amount applied for withdrawal (principal and accumulated dividend) in Account 2 can be utilised for other pre-retirement withdrawals from the EPF.
Starting from 5 April 2023, members can visit https://fsa2.kwsp.gov.my to check their eligibility and to find out the amount they can apply for under the facility. Additionally, frequently asked questions and corresponding answers related to the facility are also available on the website for members to refer to.
Members are encouraged to register or update their mobile phone number via the Self-Service Terminal (SST) available at any EPF branch for the purpose of receiving Transaction Authorisation Code (TAC) to verify their identity when conducting transactions. For more information on the Account 2 Support Facility, visit the EPF website at www.kwsp.gov.my, or call the EPF Contact Management Centre at 03-8922 6000.
