KUALA LUMPUR (April 27): The creation of Flexible Account 3 for anytime withdrawals from May 11 means Employees Provident Fund (EPF) members can choose to take out up to a third of the balance in their existing Wellbeing Account 2.

Those who choose not to opt in for the moving of a portion of existing savings from Account 2 to Account 3 by Aug 31 this year starts with zero balance in Account 3, but he or she will still see 10% of new contributions going into the newly created Flexible Account 3.

With the increase in the ratio for Retirement Account 1 to 75% from 70%, the EPF estimates that it is possible to have as many as 65% of its members achieve ‘basic savings’ by 2035, compared with only 33.1% in 2023.

The ratio for Wellbeing Account 2, however, will be halved to 15% from 30%.

While the plan is not as bad as feared, there are broader implications for members and the marketplace.

What do experts and observers say about the change in EPF contribution ratios, and what is at stake for EPF members who choose to spend the money in Flexible Account 3? Can spending just a few hundred ringgit a year from the EPF cause someone to lose five-figure savings at retirement?

Read about that and more in the April 29, 2024 issue of The Edge Malaysia weekly. 

https://www.theedgemarkets.com/node/709582