KUCHING, April 26 ― The introduction of an Employee Provident Fund (EPF) Flexible Account for short-term financial needs would only encourage more withdrawals, said Andrew Lo.

The Sarawak Bank Employees Union (SBEU) chief executive officer said following the new EPF Account Restructuring Initiative, this would worsen the already insufficient retirement savings.

“The option to transfer balances from the Wellbeing Account to the new Flexible Account between May 11 and August 31 only serves to encourage more withdrawals.

“With only 75 per cent of contributions allocated to retirement, this will worsen the already insufficient retirement savings of the majority of EPF members, especially those who are in the lower wages group,” he told The Borneo Post.

He was asked to comment on the announcement by EPF yesterday regarding the EPF Account Restructuring Initiative, which will take effect on May 11.

“It seems that the EPF savings is used as a tool to mask low or insufficient wages by allowing withdrawals, disguised as empowerment,” said Lo.

Meanwhile, Sarawak Housing and Real Estate Developers’ Association (Sheda) advisor Dato Sim Kiang Chiok viewed the new Flexible Account as a means to assist EPF contributors in times of need.

“During the Covid-19 pandemic lockdowns, the EPF’s special drawdowns have assisted its members in covering their living expenses when their earnings were affected.

“From this pandemic experience, every member will face their own difficult days, and hopefully, with this Flexible Account, it would help them to be more financially secure in their times of need,” he said.

He said while the Flexible Account, which can be withdrawn at any time, would only deduct 10 per cent of the total monthly contribution, the EPF announcement has yet to state how much interest would be earned under this account and how the funds would be credited to the contributor.

“EPF savings are intended for our retirement and to contribute to our country’s economy and businesses by fulfilling our country’s capital requirements to invest, earn and grow.

“As with any savings, it should be reserved for rainy days and retirement, and now EPF caters to both requirements,” he said.

Under the EPF Account Restructuring Initiative, all accounts of members under the age of 55 will be restructured from the previous two accounts, namely Account 1 and Account 2, to three accounts.

The three accounts will be known as “Akaun Persaraan” (Retirement Account), to accumulate savings that will serve as income during retirement; “Akaun Sejahtera” (Wellbeing Account), to address life cycle needs that contribute to wellbeing during retirement; and “Akaun Fleksibel” (Flexible Account), as a new account that provides flexibility for short-term financial needs with savings that can be withdrawn at any time according to the member’s needs and a minimum withdrawal of RM50.

All contributions after May 11 will be allocated into the three new accounts, with 75 per cent into the Retirement Account, 15 per cent into the Wellbeing Account and 10 per cent into the Flexible Account.

According to the EPF, members will have a one-time option to transfer part of the savings balance into their Akaun Sejahtera as an initial amount to Akaun Fleksibel between May 11 and August 31. ― The Borneo Post

https://www.malaymail.com/news/malaysia/2024/04/26/epf-flexible-account-will-only-encourage-withdrawals-says-sarawak-bank-employees-union-chief/130916