3rd EPF account for the cash-strapped [BTTV]

KUALA LUMPUR: The Employees Provident Fund's  much-awaited  Account 3 is expected to comprise 10 per cent of future monthly contributions that account holders can withdraw at any time.


More details on the facility  are expected to be announced soon, but the New Straits Times is made to understand that only  contributions from May onwards would be used for Account 3  and existing funds in Accounts 1 and 2 will be untouched. This means Account 3 will start with zero balance.

The spirit behind the new facility, also known as the Flexible Account, is to help contributors sustain their livelihoods  before they hit  retirement age.

Currently, 70 per cent of members' monthly contributions are channelled into Account 1, which cannot be accessed until after retirement. The other 30 per cent goes into Account 2, which can be accessed to pay for  education, healthcare and  housing, as well as a partial one-time withdrawal at age 50.

The NST learnt that  the restructured system will see  monthly contributions split three ways: 75 per cent into Account 1, 15 per cent into Account 2 and 10 per cent into Account 3.     

Contributors can withdraw the funds from Account 3 at any time — much like a savings account.

However, it is understood that the EPF would allow  members who want to maximise capital gains  to transfer the funds in Account 3 into  Accounts 1 and 2 . 


The introduction of Account 3 comes after four Covid-19 pandemic-related withdrawal programmes drained RM145 billion  from EPF.

As of December 2023,  EPF's investment assets stood at RM1.13 trillion.

In July 2023, then EPF chief strategy officer, Nurhisham Hussein, said the proposal to introduce  Account 3 was to meet the potential emergency cash needs of members.

It also aims to attract those in the informal sector to make contributions to the EPF.

Finance Minister II Datuk Seri Amir Hamzah Azizan had said EPF would explain how  monthly contributions would be split among the three accounts and the withdrawal mechanism of the Flexible Account.

In November 2023, Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid told Business Times  that  money in Account 3 was expected to remain there for a short time, so it was  likely that the Flexible Account would command lower returns than the other  accounts, which were not as easy to withdraw.

However, the NST was made to understand that members who do not  withdraw  from their Account 3 might get a "token" payout much lower than the dividend for Accounts 1 and 2. It remains to be seen how the yearly dividends will be calculated.

The EPF paid out RM57.8 billion to members  for 2023, comprising a 5.5 per cent dividend for members with the conventional account and 5.4 per cent for the Syariah account.

For 2022,  EPF announced a dividend of 5.35 per cent for conventional accounts and 4.75 per cent for Syariah accounts.

At the end of 2023, EPF had 8.5 million active members. Of these members,  6.7 million have conventional  accounts, while  the rest have Syariah accounts.

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