So the biggest news to hit Malaysia this week is of the Employees Provident Fund announcing the details of Account 3, where members could withdraw any amount they want at anytime.
This was created after calls were raised by many members after EPF during the pandemic allowed under the Government’s directive to withdraw a certain amount from their account. After the Unity Government took over, Prime Minister Datuk Seri Anwar made it clear that the retirement fund will not be used as a piggy bank with the concern of depleting savings after retiring.
Hence a compromise was reached with the creation of a new account, whereby the savings split will now into 75:15:10.
The Account 1 and Account 2 to three (3) accounts will be called:
• Akaun Persaraan to accumulate savings that will serve as income during retirement;
• Akaun Sejahtera to address life cycle needs that contribute to wellbeing during retirement; and
• Akaun Fleksibel as a new account that provides flexibility for short-term financial needs. Savings in this account can be withdrawn at any time according to members’ needs.
Mechanics of the EPF Account Restructuring
From 11 May 2024, all EPF members under the age of 55 will have their accounts restructured into three accounts namely Akaun Persaraan, Akaun Sejahtera and Akaun Fleksibel. Balances in Account 1 and Account 2 will remain in Akaun Persaraan and Akaun Sejahtera respectively, while Akaun Fleksibel will start with a zero balance.
All contributions after 11 May 2024 will be allocated into the new accounts in the following manners: 75% into Akaun Persaraan, 15% into Akaun Sejahtera and 10% into Akaun Fleksibel.
Between 11 May 2024 and 31 August 2024, members will have a one time option to transfer part of the savings balance in their Akaun Sejahtera (previously Account 2) as an initial amount to Akaun Fleksibel. If the member does not choose to opt-in for an initial amount, no transfer will be made and the existing balance will remain in Akaun Sejahtera.
Akaun Fleksibel will start with new contributions that will be credited into the member’s account after the implementation date. If the member chooses to opt-in for an initial amount, the transfer of the initial amount to Akaun Fleksibel and other accounts (if applicable) is based on the balance in the member’s Akaun Sejahtera on the date the opt-in application is made. The transfer method is according to the breakdown as below:
Balance in Akaun Sejahtera of RM3,000 and above
Transfers will be made as follows:
• Ten out of thirty (10/30) of the balance in Akaun Sejahtera will be transferred to Akaun Fleksibel;
• Five out of thirty (5/30) of the balance in Akaun Sejahtera will be transferred to Akaun Persaraan; and
• Fifteen out of thirty (15/30) will be retained in Akaun Sejahtera.
Balance in Akaun Sejahtera below RM3,000
Transfers will be made as follows:
• Akaun Sejahtera with balance of RM1,000 and below, all amount will be transferred to Akaun Fleksibel.
• Akaun Sejahtera with balance of more than RM1,000 and less than RM3,000, the amount transferred to Akaun Fleksibel is RM1,000, while the remainder is retained in Akaun Sejahtera.
• No distribution will be made to Akaun Persaraan for savings balance below RM3,000.
The difference in this distribution method is to enable members with low savings balance to also have a meaningful initial amount in their Akaun Fleksibel.
A summary of the initial amount distribution is as illustrated below:
Members can only choose to opt-in for the transfer of the initial amount to Akaun Fleksibel one (1) time starting from the effective date until 31 August 2024, after which the opt-in cannot be cancelled. Members who wish to take advantage of this opt-in can submit their application through the KWSP i-Akaun application or the Self-Service Terminals at any EPF branches nationwide.
Akaun Fleksibel Withdrawal
Members can make withdrawals from Akaun Fleksibel at any time for any purpose, subject to a minimum withdrawal amount of RM50. Applications for withdrawals from Akaun Fleksibel can be made online through KWSP i-Akaun or at any EPF branches nationwide. Members who have yet to register with KWSP i-Akaun are encouraged to do so in order for withdrawal transactions from Akaun Fleksibel to be made.
Akaun 55 and Akaun Emas
Similar to the current practice, all savings in Akaun Persaraan, Akaun Sejahtera, and Akaun Fleksibel of members who have reached age 55 will be merged into Akaun 55. New contributions received by members from the age of 55 will be credited into Akaun Emas.
However, wealth managers have advised those who dont need emergency funds not to withdraw as this could lead to having fewer funds for later years and the lost of compounding interest from one of the best savings scheme ever devised in Malaysia.