In a significant overhaul aimed at bolstering financial security for its members, the Employees Provident Fund (EPF) of Malaysia has announced a restructuring of its account system. Starting May 11, all EPF members under the age of 55 will transition from having two accounts to three, each designed to serve distinct financial needs more effectively.
New Account Structures for Enhanced Financial Planning
The newly introduced accounts are:
- Akaun Persaraan (Retirement Account) – This account will hold 75% of future contributions and is designed to build the funds that members will rely on during their retirement years.
- Akaun Sejahtera (Wellbeing Account) – Allocated 15% of contributions, this account is tailored to meet lifecycle needs that contribute to wellbeing during retirement, such as healthcare.
- Akaun Fleksibel (Flexible Account) – The most innovative addition, this account will receive 10% of contributions and offers the flexibility to withdraw funds at any time for short-term financial needs, with withdrawals starting from a minimum of RM50.
Strategic Allocation and Transfer Options
The balances in the existing two accounts will be realigned with Akaun Persaraan inheriting the balance of what was previously Account 1, and Akaun Sejahtera taking over the balance of Account 2. Akaun Fleksibel will start with a zero balance but will grow with new contributions post-implementation.
From May 11 until August 31, 2024, EPF members have a one-time option to transfer a portion of their Akaun Sejahtera balance to kickstart their Akaun Fleksibel. This option allows for strategic redistribution based on the amount in Akaun Sejahtera:
- Balances of RM3,000 and above will see 10/30 transferred to Akaun Fleksibel, 5/30 to Akaun Persaraan, and 15/30 retained in Akaun Sejahtera.
- For balances below RM3,000 but more than RM1,000, RM1,000 will move to Akaun Fleksibel with the remainder staying in Akaun Sejahtera.
- Balances of RM1,000 and below will transfer entirely to Akaun Fleksibel, enhancing the liquidity for members with lower savings.
Empowering Members in a Changing Economic Landscape
EPF CEO Ahmad Zulqarnain Onn emphasized that this restructuring is not merely a response to present conditions but a forward-looking measure to address the evolving job landscape and demographic shifts. By enabling members to tailor their financial planning to their specific needs, EPF aims to equip its members with the tools necessary for financial resilience in a dynamic economic environment.
Members interested in taking advantage of the new structures and transfer options can submit their applications through the KWSP i-Akaun app or at self-service terminals available at EPF branches nationwide.
Conclusion
This restructuring initiative by the EPF marks a proactive step towards increasing retirement savings adequacy among Malaysians. It reflects a nuanced understanding of the financial realities facing today’s workforce and the need for flexible financial planning tools. As members begin to navigate this new system, the long-term benefits could be substantial, offering a more secure and prosperous retirement.
