KUALA LUMPUR, April 25 — The Employees' Provident Fund (EPF) announced today a restructuring of its contributors' accounts that would allow those opting in to withdraw from a new Account 3 starting May 11, in a much-anticipated move that is both welcomed and criticised.

Under the restructuring, all contributors will have three accounts but withdrawal from the third account which is named "Fleksibel" will be optional. Those who choose for the flexible scheme will see their contribution divided at a ratio of 75-15-10 starting May onwards.

This means up to 10 per cent of total savings will be front-loaded for those opting in, with withdrawal allowed starting May 11. No limit will be imposed for withdrawal but it cannot be less than RM50 at a time. Contributors can choose to withdraw partially or all at once.

Monthly contributions that go into the flexible account can also be withdrawn provided there is not less than RM3,000 in the second account, now called “Sejahtera”. The window to opt for the flexible arrangement will continue until August.

“The main focus of the EPF Account Restructuring initiative is to empower members in making decisions to balance future needs for retirement between short-, medium- and long-term financial needs,” EPF chief executive officer Ahmad Zulqarnain Onn said in a statement.

“This initiative will also help increase members’ retirement savings so that they will have sufficient retirement income to sustain their needs after retirement.”

Economist Zouhair Rosli said the move may not be ideal but necessary to assist the financially vulnerable.

“In an idealistic world, Account 3 should not be introduced. But in reality, it does help those vulnerable who need cash although the downside is that his or her total savings will reduce if there is regular withdrawal from Account 3,” he told Malay Mail.

“The positive thing is that the members will have to increase their retirement savings by 5 per cent from 70 per cent. This will help to boost the retirement savings in the long run, especially from the younger members.”

https://www.malaymail.com/news/malaysia/2024/04/25/epf-confirms-account-3-named-fleksibel-which-lets-contributors-withdraw-anytime-starting-may-11/130746