EPF accounts to be restructured effective May 11
In a statement, the Employees Provident Fund (EPF) has announced a restructuring of its members’ accounts effective 11 May 2024. However, members will be able to fully access the system from May 12.
All EPF members below age 55 will have their member accounts restructured from two (2) accounts namely Account 1 and Account 2 to three (3) accounts.
Akaun Persaraan, Akaun Sejahtera and Akaun Fleksibel
According to the EPF statement, the current Account 1 and 2 will be renamed Account Persaraan and Akaun Sejahtera respectively. Meanwhile the new Account 3 is known as Akaun Fleksibel.
- Akaun Persaraan – to save for income during retirement;
- Akaun Sejahtera – to pay more major life cycle needs that contribute to retirement wellbeing
- Akaun Fleksibel – new account for short-term financial needs that can be withdrawn any time
All contributions after 11 May 2024 will be allocated into the new accounts. The distribution will be: 75% into Akaun Persaraan, 15% into Akaun Sejahtera and 10% into Akaun Fleksibel.
One time option to transfer part of EPF savings into Account 3 (Akaun Fleksibel)
If you qualify (under age 55) and do nothing, your existing funds in Account 1 and 2 will remain untouched and Account 3 will start from zero balance.
However, EPF members who qualify have been given a ONE time option to transfer part of their savings in Account 2 (Akaun Sejahtera) to the new Account 3 (Akaun Fleksibel). The time given is between May 11 until August 31, 2024. If you do not choose to opt-in for this option, no transfer will be made. The existing balance will remain in Akaun Sejahtera.
How does the opt-in for initial transfer to Account 3 work?
If the member chooses to opt-in for an initial amount, the transfer of the initial amount to Akaun Fleksibel and other accounts (if applicable) is based on the balance in the member’s Akaun Sejahtera on the date the opt-in application is made. If you have more than RM3,000 in Account 2 when opting in, a percentage will also be transferred into your Account 1 along with the percentage transferred into Account 3.
Below is the sample calculation provided by EPF on how the initial transfer opt-in will be calculated based on a member’s Account 2 (Akaun Sejahtera) having more or less than RM3,000 in savings.
Source: KWSP
If the member chooses to opt-in for an initial amount, the transfer of the initial amount to Akaun Fleksibel and other accounts (if applicable) is based on the balance in the member’s Akaun Sejahtera on the date the opt-in application is made. If you have more than RM3,000 in Account 2 when opting in, a percentage will also be transferred into your Account 1 along with the percentage transferred into Account 3. The distribution is as follows:
Remember, you can choose the opt-in transfer to Account 3 (Akaun Fleksibel) only one time. This is from May 11 until August 31, 2024. After that deadline, the opt-in cannot be cancelled.
If you qualify and want to opt-in, submit your application through the KWSP i-Akaun application or at the Self-Service Terminals at any EPF branches nationwide.
How to withdraw from Account 3 (Akaun Fleksibel)
Withdrawals from Akaun Fleksibel can be made any time with a minimum withdrawal amount of RM50.
Members who want to withdraw can make the application online through KWSP i-Akaun or at any EPF branches nationwide.
If you do not have i-Akaun, you are encouraged to register with KWSP i-Akaun. By registering, you can just do the withdrawal transaction directly from your Akaun Fleksibel online.
Akaun 55 and Akaun Emas update
According to EPF, similar to current practice, all savings in Akaun Persaraan, Akaun Sejahtera, and Akaun Fleksibel of members who have reached age 55 will be merged into Akaun 55.
New contributions from members aged 55 and above will go into their Akaun Emas.
What is the purpose of Account 3 (Akaun Fleksibel)
The main purpose behind the implementation of Account 3 is to help EPF members sustain their livelihoods before retirement.
The Account 3 initiative came about after several COVID-19 related withdrawal programmes drained up to RM145 billion from the EPF. As of December 2023, EPF’s investment assets stood at RM1.13 trillion.
As such, the proposal of Account 3 was to assist EPF members with emergency cash needs. It also aims to attract those in the informal sector to make contributions to the EPF.
What is the dividend for Account 3?
As the money in Account 3 is not expected to be stored there for long periods of time, there is speculation that it will command lower returns overall compared to Account 1 and 2. However, the statement issued by EPF made no reference to the returns for Account 3 (Akaun Fleksibel).
According to a Bernama report quoting EPF, the “dividends will remain the same across all three accounts”.
“However, this could change in the future as liquid assets by default do not attract higher interest rates or dividends.” EPF CEO Ahmad Zurqarnain Onn told the news service.