The Employee Provident Fund (EPF) was first introduced in 1951 to help Malaysians save for their retirement. Employees contribute 11% of their salaries to their EPF account every month through automatic salary deductions. On top of that, employers contribute 12% to 13% of the salary to the employee’s EPF account monthly as well.
EPF contributions are apportioned into three accounts, which are Retirement Account, Wellbeing Account and Flexible Account. As the EPF is created mainly to help individuals save for their golden years, 75% of total contributions are channeled into the Retirement Account and can only be accessed when you turn 55 years old.
Meanwhile, 15% of contributions goes into the Wellbeing Account and the remaining 10% of contributions into the Flexible Account. Throughout the years, EPF has evolved to assist members in paying for essentials such as housing and medical expenses as well. Members can make pre-retirement withdrawals before the age of 55 from Wellbeing Account and Flexible Account for certain purposes.
Read Also: How Much Do Malaysians Have In EPF Savings?
Common Types Of Pre-Retirement Withdrawals
Housing Withdrawal
EPF members can make withdrawals from the Wellbeing Account to purchase a residential house. You can withdraw the differential amount between the home purchase price and approved loan amount. On top of that, you can also withdraw 10% of the purchase price or your entire savings in the Wellbeing Account, whichever is lower.
To be eligible for the housing withdrawal, you need to have a minimum balance of RM500 in the Wellbeing Account.
You are also eligible only if you’re making the housing withdrawal for the first time or if you have made a withdrawal previously whereby the property had been sold or disposed of.
Besides withdrawing your savings when you first purchased a home, you can also apply to use savings in your Wellbeing Account to pay for monthly housing loan instalments. To be eligible for the withdrawal, you need to have a minimum balance of RM600 in your Wellbeing Account and have started paying monthly loan instalments for your residential home. You can withdraw the total housing loan balance
or entire savings in Wellbeing Account, whichever is lower.
Education Withdrawal
A quality education can pave the way for a stable career and betterment of your life. You can tap into your Wellbeing Account to fund education for yourself, your spouse, children or parents at approved institutions, both locally and abroad.
The savings in your Wellbeing Account can be used to pay for your tuition fees, education loan, hostel fees and one-way flight for first-year students studying outstation/abroad.
Do note that if you quit or fail and withdraw from your course, you will need to pay for any overdue payment to the institution within three years starting from the termination of education, and settle remaining education loan.
Read Also: What Is The National Education Savings Scheme (SSPN) In Malaysia?
Health Withdrawal
Members can also withdraw monies to fund medical costs for illnesses and purchase medical equipment that are approved by EPF.
The types of illnesses covered include cardiovascular, endocrine, gastroenterology, genitourinary, hematology, nervous system, ophthalmology, orthopedic, respiratory, mental illness, rheumatology and cancer.
Members can withdraw their savings to fund the medical costs of their spouse, parents, children and siblings. The health withdrawal is only applicable to illnesses that are not fully covered by employers.
Read Also: Guide To Purchasing Life And Critical Illness Insurance Via EPF’s i-Lindung
Flexible Withdrawal
Starting from May 2024, members can withdraw savings in the Flexible Account at any time, with no questions asked or documents required.
You can withdraw a minimum of RM50 from the Flexible Account anytime. You just need to have savings in your Flexible Account and submit an active bank account number for payment processing.
Read Also: Guide To EPF Account 3 Savings, And What You Should Use Them For?
Reaching Age 55? You Can Withdraw Your Entire EPF Savings Soon
Upon turning 55 years old, you will be able to access your entire EPF savings. Contributions in your three EPF accounts – Retirement Account, Wellbeing Account and Flexible Account will be consolidated into one account, Account 55.
You can withdraw the entire savings in your Account 55. Alternatively, you can make partial withdrawals at any time. There is no minimum withdrawal amount for partial withdrawals.
If you want to pace your withdrawals, you can opt for monthly payments as well. Members can apply for monthly withdrawals of a minimum of RM100 for at least 12 months. The payments will be credited to your bank account on every 25th of the month.
You can also withdraw only your yearly or monthly dividends. For yearly dividends, you can withdraw the lump sum dividend amount based on your previous year’s savings. On the other hand, you can make monthly dividend withdrawals. The minimum withdrawal amount is RM100 for at least six months.
Besides withdrawing your savings, you can also transfer your savings for investment with approved financial management institutions (FMIs). The minimum transfer amount is RM1,000.
Do note that foreigners who become a member on or after 1 August 1998 will only be able to withdraw EPF savings in full and not have the option to withdraw them partially.
If you continue working past age 55, your further contributions will go into an account known as Gold Account.
Age 60 Withdrawal
At age 60, your savings in Account 55 and Gold Account will now be combined. Similarly, you can make a full withdrawal or partial withdrawal at any time.
To apply for a withdrawal, you need to make submissions at any nearest EPF counter or mail the submissions to EPF’s Transaction Management Department. You will need to furnish several documents including your identification card, savings account statement or verification letter of account holder’s details from bank.
Should You Withdraw Your EPF Savings?
The decision of withdrawing your EPF savings depends on your financial needs and situation. If there’s an urgent need for money, you may withdraw your savings.
However, taking out your money before retirement age could leave you with insufficient retirement funds that you may need in the future. The EPF helps members grow their savings by investing in a diverse portfolio and offers a minimum guaranteed dividend of 2.5% for conventional savings. But it has delivered a dividend of above 5.0% since a decade ago.
Members who have reached the age of 55 have the option to withdraw their savings either partially or in full. There are also various options for partial withdrawals such as taking out monthly payments or monthly dividends. EPF members who keep their savings in their EPF accounts will continue to enjoy dividends up to age 100.
Read Also: Guide To EPF Dividend Rates: How Much Malaysians Have Earned Since 1952
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