The Employees Provident Fund (EPF) has unveiled a significant restructuring of members’ accounts to enhance retirement income security while addressing current life cycle needs.
‘This restructuring allows EPF members to readily access some of their savings through the new Flexible Account, while continuing to build their retirement savings in the Retirement Account,’ explained EPF CEO Tuan Syed Hamadah.
Effective 11 May 2024, the EPF will restructure the accounts of all members under the age of 55 from the current two accounts (Account 1 and Account 2) into three new accounts:
From 11 May 2024 onwards, all new contributions will be automatically allocated across these three accounts: 75% credited to Akaun Persaraan (previously Account 1), 15% to Akaun Sejahtera (previously Account 2), and 10% to Akaun Fleksibel.
The newly introduced Akaun Fleksibel is designed to help members access savings for short-term financial needs. Members can withdraw any amount from this account at any time, subject to a minimum withdrawal of just RM50.
Frequently Asked Questions
Will Akaun Fleksibel start with a zero balance?
No. To kickstart the Akaun Fleksibel, members will have a one-time option during the opt-in period from 12 May 2024 to 31 August 2024 to transfer a portion of their existing Akaun Sejahtera (previously Account 2) balance into the new Flexible Account. Depending on their Akaun Sejahtera balance, between 10-100% of those funds can be transferred.
Is there an option for members to not opt for the initial transfer amount?
Yes, if you choose not to transfer an initial amount to Akaun Fleksibel, your existing balance will remain in Akaun Persaraan (previously Account 1) and Akaun Sejahtera (previously Account 2). However, starting 11 May 2024, new contributions will be credited to all three accounts—Akaun Persaraan, Akaun Sejahtera, and Akaun Fleksibel—based on the 75/15/10 ratio.
Are there any conditions for withdrawing from Akaun Fleksibel?
No, the Akaun Fleksibel provides flexible access to your savings. You can withdraw from this account anytime, with a minimum withdrawal amount of just RM50. No supporting documents are required. Funds will be credited to your specified bank account within seven business days after submitting the request via the KWSP i-Akaun online portal or at any EPF branch nationwide.
Will Akaun Fleksibel’s dividend rate be lower?
No. The same dividend rate will apply to all three accounts. At this time, the account restructuring will not change the current policy on establishing dividend rates. Over the past ten years, EPF has averaged a 5.95% dividend rate on conventional accounts.
Can I choose to make voluntary contributions to Akaun Fleksibel only?
No, voluntary EPF contributions of up to RM100,000 per year will be split across all three accounts based on the 75/15/10 ratio. There is no option to contribute solely to Akaun Fleksibel.
Can I transfer savings from Akaun Fleksibel to Akaun Persaraan and Akaun Sejahtera?
Yes, but this is a one-way transfer. Once completed, the funds cannot be reversed back into Akaun Fleksibel.
Is Akaun Fleksibel available to members aged 55 and above?
No, the EPF account restructuring only impacts members who have not reached age 55 by 11 May 2024. Similar to current practice, for those aged 55 and above, all savings in the three new accounts will be merged into Akaun 55, while new contributions will be credited into Akaun Emas.
The fifth perspective
The Malaysian government’s introduction of Akaun Fleksibel appears to be a direct response to public demands for greater flexibility in accessing EPF savings. During the COVID-19 pandemic from 2020 to 2022, the government allowed EPF members to make multiple special withdrawals from their accounts to cope with financial hardships.
The new Akaun Fleksibel could be a welcome option for Malaysians struggling to build an emergency fund or maintain liquid savings for short-term needs. With automatic monthly contributions coupled with dividends averaging a decent 5.95% per annum in recent years, the Akaun Fleksibel arguably offers better returns than typical risk-free liquid accounts like savings or money market funds. This makes it an attractive option to park one’s emergency fund while still enjoying some growth.
By allowing hassle-free withdrawals starting at just RM50, the new Flexible Account empowers EPF members to decide how best to utilise their provident fund savings based on their financial circumstances and requirements. This balanced approach recognises both the need for retirement savings and accessing funds for prevailing needs.
However, this increased liquidity also brings added responsibility for EPF members. Past withdrawal patterns indicate many have opted to make non-essential withdrawals, potentially jeopardising their ability to accumulate sufficient savings for a comfortable retirement.
The burden now falls on individuals to judiciously utilise the Akaun Fleksibel facility. Striking the right balance between meeting present needs and securing their future financial well-being will require careful planning and discipline. Proper financial literacy initiatives will be crucial to guide members in optimising this new flexibility.
Ultimately, while laudable for promoting choice, the success of Akaun Fleksibel hinges on EPF members’ financial habits and literacy. The government must complement this policy with robust education to foster a savings-conscious mindset. Only then can this flexible reform truly enhance retirement security while delivering on its promise of greater financial security.
