KUALA LUMPUR: The Employees Provident Fund (EPF) has officially announced the introduction of Account 3/Flexible account for members below the age of 55, which is expected to begin implementation as early as 11 May 2024.
Account 3 will allow members to withdraw funds at any time, similar to a savings account, with a minimum withdrawal amount of RM50 and a maximum of 10% of their total savings.
Eligible members will be given a grace period – which will start tomorrow – to decide whether they would want to opt for Account 3 or continue contributions as usual with only Account 1 and Account 2.
For those who decide to implement the Account 3 option, their monthly contributions will be split where 75% will go to Account 1, 15% to Account 2 and 10% to Account 3.
Currently, EPF contributions are split into 70% and 30% to Account 1 and Account 2 respectively.
According to Finance Minister II Amir Hamzah, the realisation of Account 3 will replace the implementation of EPF-targeted withdrawals.
Additionally, members will still be able to transfer any amount of contributions saved from Account 3 to either Account 1 or Account 2. However, any transfers vice versa will not be applicable.
The funds in Account 1 cannot be accessed until retirement while the funds in Account 2 can only be withdrawn for certain purposes that are related to education (including paying back student loans) or payment for housing loans.
While the option of having an Account 3 may translate as good news to most people of the public, especially the B40 community which may be in dire need of short-term financial aid, economic experts have already been voicing concerns regarding the issue and the negative impact it may have on the members’ dividend in the long run.
