Over 3 Million Applications Approved in Under Two Weeks

Effective May 11, 2024, new contributions will be based on percentage: Akaun Persaraan (75 per cent), Akaun Sejahtera (15 per cent) and Akaun Fleksibel (10 per cent) compared to previously, that is, Akaun 1 (70 per cent) and Account 2 (30 per cent). After the restructuring, balance in Account 1 and Account 2 will remain in Akaun Persaraan and Akaun Sejahtera respectively, while Akaun Fleksibel will start with a zero balance. The dividends will remain the same across all three accounts.

Arising from the above restructuring, Employees Provident Fund (EPF) has approved 3.04 million applications to withdraw money from Account Flexible (or Account 3) as of May 22, amounting to RM5.52 billion. This is since the option became available to members on May 12. It has also received 2.86 million applications during the period to transfer an initial amount from Account Sejahtera (or Account 2) to Account Flexible, involving RM8.78 billion.

EPF members under the age of 55 got the new Account Flexible from May 11, from which they can make withdrawals at any time, and for any purpose, with a minimum withdrawal of RM50. And members can, until Aug 31 this year, opt to transfer one-third of their savings from Account Sejahtera to Account Flexible. The amount transferable is based on the balance in Account Sejahtera at the time of application.

The EPF expects the number of transfer applications to continue rising until the Aug 31 deadline. In the mean time, it advised its members not to rush into making the transfer.

At the moment, this development has not become critical. The problem is the Akaun Fleksible (10%) will be seen too small and a change in the percentage will be proposed soon. From 10% to 20% or 30%. That’s when it becomes an ATM! The retirement fund is for our post-employment needs, not for meeting current expenditure.

EPF had total contributions of RM102.8 billion while withdrawals were RM50.6 billion in 2023, better than in 2022 (RM91 billion). Will that remain in the future? Not if politicians have their way!

References:

EPF approves over 3 mil applications for RM5.52 bil Acc 3 withdrawals in under two weeks, CEO Morning Brief, 28 May 2024

EPF Account 3: Avoid impulsive withdrawals, financial planning crucial, experts say, New Straits Times, 10 May 2024