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All EPF members under the age of 55 will have their accounts restructured into three accounts, aimed at helping balance future needs for retirement between short-, medium-, and long-term financial needs.
Malaysia's Employees Provident Fund (EPF, or Kumpulan Wang Simpanan Pekerja) has announced a restructuring of its members’ accounts with the aim to further enhance their income security after retirement while addressing members’ current life cycle needs.
Effective 11 May 2024 (Saturday), member accounts will be restructured from two accounts — namely Account 1 and Account 2, to three accounts:
- Akaun Persaraan to accumulate savings, which will serve as income during retirement;
- Akaun Sejahtera to address life cycle needs that contribute to wellbeing during retirement, and
- Akaun Fleksibel as a new account that provides flexibility for short-term financial needs. Savings in this account can be withdrawn at any time according to members’ needs.
According to EPF Chief Executive Officer Ahmad Zulqarnain Onn, the main focus of the restructuring initiative hopes to empower members in making decisions to balance future needs for retirement between short-, medium-, and long-term financial needs.
"This initiative will also help increase members’ retirement savings so that they will have sufficient retirement income to sustain their needs after retirement."
Mechanics of the EPF account restructuring
Following the restructuring, balances in Account 1 and Account 2 will remain in Akaun Persaraan and Akaun Sejahtera respectively, while Akaun Fleksibel will start with a zero balance.
All contributions after 11 May 2024 will be allocated into the new accounts in the following manners:
- 75% into Akaun Persaraan
- 15% into Akaun Sejahtera
- 10% into Akaun Fleksibel
Between 11 May 2024 and 31 August 2024, members will be given a one-time option to transfer part of the savings balance in the Akaun Sejahtera as an initial amount to the new Akaun Fleksibel. Should they choose not to opt in for an initial amount, no transfer will be made and the existing balance will remain in Akaun Sejahtera.
Akaun Fleksibel will start with new contributions that will be credited into the member’s account after the implementation date.
Alternatively, should the member choose 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. A breakdown for the transfer method is as follows:
Balance of RM3,000 and above in Akaun Sejahtera
Transfers will be made as follows:
- 10/30 of the balance in Akaun Sejahtera will be transferred to Akaun Fleksibel;
- 5/30 of the balance in Akaun Sejahtera will be transferred to Akaun Persaraan; and
- 15/30 will be retained in Akaun Sejahtera.
Balance of below RM3,000 in Akaun Sejahtera
Transfers will be made as follows:
- If the balance is RM1,000 and below, all amounts will be transferred to Akaun Fleksibel.
- If the balance is more than RM1,000 and less than RM3,000, the amount transferred to Akaun Fleksibel is RM1,000, while the remainder is retained in Akaun Sejahtera.
- No distribution will be made to Akaun Persaraan for savings balance below RM3,000.
As EPF's statement clarifies, the difference in this distribution method enables members with low savings balance to also have "a meaningful initial amount" in their Akaun Fleksibel.
Following the one-time option ending on 31 August 2024, the opt-in cannot be cancelled. Members who wish to take advantage of this opt-in can submit their application through the KWSP i-Akaun application or the self-service terminals at any EPF branches nationwide.
Ahmad Zulqarnain added: “This initiative is not just EPF’s response to current needs, but is also a proactive step to help members facing the changing job landscape and demographics of the population as well as the life cycle needs of EPF members.
"With these enhancements, the EPF strives to ensure that every EPF member can manage their finances with confidence and resilience in this dynamic and challenging environment.”
As for the Akaun Fleksibel, members can make withdrawals at any time for any purpose, subject to a minimum withdrawal amount of RM50.
Applications for withdrawals from Akaun Fleksibel can be made online through KWSP i-Akaun or at any EPF branches nationwide. EPF encourages members who have yet to register with KWSP i-Akaun to do so in order for withdrawal transactions from Akaun Fleksibel to be made.
Lastly, 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 received by members from the age of 55 will be credited into Akaun Emas. Members can fully access the system on 12 May 2024.
Lead image / EPF
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