The Employees Provident Fund (EPF / KWSP) is set to launch Account 3 soon, New Straits Times reports. It is revealed that this new facility (also referred to as “Flexible Account”) is intended to support account holders in cases of emergencies, allowing them to withdraw 10% of their monthly contributions at any time.
While further details are yet to be officially announced, the publication has learned that only contributions from May onwards will feed into Account 3, which starts with zero balance. It is said that the introduction of the new facility follows significant withdrawals due to COVID 19, which reportedly drained RM145 billion from EPF.
The revamped system will see monthly contributions divided into three parts: 75% into Account 1, 15% into Account 2, and the remaining 10% into the new Account 3. The latter is said to operate like a savings account, enabling easy withdrawals, but members can also transfer funds to Accounts 1 and 2 to maximise capital gains.
Currently, 70% of monthly contributions go into Account 1 (accessible only after retirement), while 30% is allocated to Account 2. The former is only accessible after retirement, whereas the latter allows withdrawals for purposes such as education, healthcare, housing, and partial withdrawals at age 50.
It is said that EPF intends to clarify how monthly contributions will be distributed across the three accounts and explain the withdrawal process for the Flexible Account. However, some experts anticipate lower returns on Account 3 due to its easier withdrawal process, suggesting that funds may remain there for shorter durations compared to Accounts 1 and 2.
Nonetheless, members who refrain from withdrawing from Account 3 might receive a reduced dividend payout, potentially termed as a “token” payout, in comparison to Accounts 1 and 2. The methodology for calculating yearly dividends remains unclear and awaits further clarification.
Recently, EPF has declared a dividend of 5.5% for members with conventional accounts and 5.4% for Syariah accounts for 2023. It is reported that the organisation has paid out RM57.81 billion to members for the previous year, and there are currently 8.5 million active account holders.
(Source: New Straits Times)
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