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EPF Might Introduce ‘Account 3’ for Withdrawals, to be Announced on 25 April

KUALA LUMPUR: The Employees Provident Fund (EPF) is planning to introduce a new account that would allow members to withdraw from RM50 to a maximum of 10% of their savings.

Should the new account, Account 3 or ‘flexible account’ be realised, new contributions into the members’ EPF 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.

Dividend concerns

However, talks of Account 3 have started to make experts anxious when it comes to dividend rates. While it is unlikely for the dividend rate to be severely impacted because of this, the overall net dividend returns might be affected.

This is considering the new account making up 10% of a member’s total contribution.

According to experts, expectations of potentially lowering dividend aligns with former finance minister Tengku Datuk Seri Zafrul Abdul Aziz, saying that the EPF dividend rate in 2021 should have been higher at 6.7%, compared to the finalised 6.1% at the time.

He said this dividend would not have been impacted if there was no outflow of savings by its members, highlighting the fact that an additional dividend of RM5.4 billion could be distributed to all its members if previous withdrawals were not made.

It was reported that in February 2023, a total of RM145 billion was withdrawn from the EPF by 8.1 million members.

‘A good strategy by EPF’

According to Tradeview Capital Chief Executive Officer and Founder Nd Zhu Hann, the concern is not serious and is overshadowed by the benefit that may arise.

“When there was a series of withdrawals allowed by the government in 2021-2022, the outflow from EPF led to more than RM100 billion worth of withdrawals,” he said, highlighting that Account 3 only allows for 10% of the total savings to be withdrawn.

“I foresee that EPF will be even better at managing the fund allocation via the strategic asset allocation means to meet flexible withdrawal demands in the long term.

“It will also be helpful for them to plan or forecast when it comes to projecting returns and dividend payouts,” he added.

Ng also suggested that it would be beneficial for the members if EPF could provide the option to move monies from Account 3 to either Account 1 or Account 2, allowing the members to save more if they prefer.

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