The Employees Provident Fund (EPF) will announce the highly-anticipated Account 3 tomorrow (Apr 24), offering flexibility to contributors in managing their savings.
EPF members will be given a period from May until August this year to decide on the arrangement and if they want to move some initial amount to the flexible account. It was learnt that a key feature of Account 3 is the freedom to opt in or opt out based on individual financial goals.
Even if contributors decided to opt out, it is understood that Account 3 will still remain at zero balance until they add money later.
Among the three EPF accounts, Account 1 – known as Akaun Persaraan – will be designated for retirement savings, while Account 2, referred to as Akaun Sejahtera, will cater to withdrawals for education, health and housing expenses.
The freshly-minted Account 3, named Akaun Fleksibel, will serve as a reserve for unforeseen emergencies.
Currently, 70 per cent of EPF members’ monthly contributions are channelled into Account 1, which cannot be accessed until after retirement. The other 30 per cent goes into Account 2, which can be accessed to pay for education, healthcare and housing, as well as a partial one-time withdrawal at age 50.
However, from May, the restructured system will see monthly contributions split three ways: 75 per cent into Account 1, 15 per cent into Account 2 and 10 per cent into Account 3. Account 3 provides contributors with the flexibility to withdraw funds at any time, similar to a savings account.
Additionally, EPF is considering allowing members aiming to maximise capital gains to transfer funds from Account 3 to Accounts 1 and 2. The introduction of Account 3 comes after four Covid-19 pandemic-related withdrawal programmes drained RM145 billion from the EPF.
As of December 2023, the pension fund’s investment assets stood at RM1.13 trillion.
