Since May 2024, the Employees Provident Fund (EPF) accounts had been restructured from two accounts, known as Account 1 and 2, to three accounts.
Following the restructuring, Account 1 was renamed as Retirement Account, and hold savings for post-retirement that can be withdrawn once members reach the age of 55. Meanwhile, Account 2 is now known as Wellbeing Account, which is to fulfill certain needs required for the well-being of a person during retirement such as housing that can be withdrawn before the age of 55.
In addition to that, there is a new third account, namely the Flexible Account, which holds savings that can be withdrawn at any time for immediate news.
According to EPF Chief Executive Officer Ahmad Zulkarnain Onn, the change was initiated to help members ‘balance their future retirement needs between short-, medium- and long-term financial needs’.
The new EPF account structure came after the government introduced special withdrawals during the Covid pandemic, which allowed the fund’s members to dip into their EPF savings to tide things over during a time where many are experiencing financial difficulties. According to a news report, a total of RM145 billion in EPF savings were taken out under the special withdrawals, which resulted in EPF members having low savings for their retirement.
While the introduction of a Flexible Account will provide financial relief to some, others are wary of withdrawing funds that are meant for their retirement. Since the restructuring of the EPF accounts, a total of RM7.81 billion has been withdrawn from the EPF Account 3 in June, as noted in a recent news report.
Read Also: What Happens To Your EPF Savings If You Continue To Work After Retirement Age?
New EPF Account Structure
With the implementation of the new EPF accounts, the savings balance in Account 1 and Account 2 will remain in Retirement Account and Wellbeing Account. The Flexible Account, which is new, will start with RM0.
However, EPF members are given the opportunity to make a one-time transfer from their Wellbeing Account to the Flexible Account before the end of August 2024.
Depending on the balance in your Wellbeing Account, the following amounts will be transferred to your Flexible Account:
| Balance In Wellbeing Account | |
| RM3,000 and above |
|
| RM1,001 to RM3,000 |
|
| RM1,000 and below |
|
Contributing To EPF Account 3
Every month, employees contribute 11% of their salary to the EPF, while employers make a matching contribution of 13% of the employee’s salary to the EPF. Employees will receive annual dividends on the contributions to save towards their retirement.
Following the activation of the new EPF account structure, contributions will be distributed across the EPF accounts at the following rates:
| EPF Accounts | Distribution rate |
| Retirement Account | 75% |
| Wellbeing Account | 15% |
| Flexible Account | 10% |
For example, if the contribution is RM1,000, 75% of the contribution, which is RM750, will be distributed to the Retirement Account. Meanwhile, RM150 will be distributed to the Wellbeing Account and the remaining RM100 will be allocated to the Flexible Account.
The dividend rates for all three accounts are the same.
Withdrawing From EPF Account 3
EPF members can make a minimum withdrawal of RM50 from EPF Account 3 at any time, provided that they fulfill the following conditions:
- Below age 55
- Has a minimum balance of RM50 in EPF Account 3
You can apply for withdrawal of savings in the EPF Account 3 online through KWSP I-Akaun or on EPF’s website. You can also drop by the nearest EPF office branch to make a manual application.
Applicants don’t need to submit any documents for the withdrawal but are required to provide am active bank account number.
What You Should Use Your Savings In EPF Account 3 For?
The EPF was introduced by the government with the purpose of helping workers in the private sector, who don’t have pension income, save for their retirement years.
According to data from the Department of Statistics, Malaysians are expected to live beyond 70 years of age and so, it’s important to make sure we’re financially prepared after retirement.
The introduction of the EPF Account 3 provides members with some flexibility in accessing funds for immediate needs. EPF members can tap into their EPF savings for certain essential needs such as paying your home loan and healthcare needs as these contribute to a positive retirement experience.
Besides, you can also invest in various investments using your EPF savings and grow your retirement nest egg. EPF has been consistently delivering dividends of over 5% over the last decade for conventional savings. However, you can consider diversifying your investments so you’re not relying only on one investment.
Read Also: What’s The Difference Between Malaysia’s EPF Conventional And Shariah Savings?
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