The Employees Provident Fund (EPF / KWSP) is getting ready to launch Account 3, also called the "Flexible Account." It lets members take out 10% of their monthly contributions whenever they need them, especially during emergencies.
by Hong Yuan
The Employees Provident Fund (EPF / KWSP) is getting ready to launch Account 3, also called the "Flexible Account." It lets members take out 10% of their monthly contributions whenever they need them, especially during emergencies.
New Straits Times reports shared some early info before the official announcement, saying contributions might start from May onwards.
Additional information about the facility is expected to be disclosed soon. However, according to the New Straits Times, it is understood that only contributions made from May onwards will be allocated to Account 3, leaving existing funds in Accounts 1 and 2 unaffected. Consequently, Account 3 will start with a balance of zero.
Account 3, also known as the Flexible Account, was mooted to allow EPF members more flexibility in accessing their savings.
The introduction of Account 3 comes after four COVID-19 pandemic-related withdrawal programs drained RM145 billion from EPF. 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 percent of members' monthly contributions are channeled into Account 1, which cannot be accessed until after retirement. The other 30 percent 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.
Once Account 3 launches, the restructured system will see monthly contributions split three ways: 75 percent into Account 1, 15 percent into Account 2, and 10 percent 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 maximize capital gains to transfer the funds in Account 3 into Accounts 1 and 2.
The NST found out that members who do not withdraw from Account 3 might receive a smaller "token" payout compared to the dividends for Accounts 1 and 2. It remains to be seen how the yearly dividends will be calculated.
The chief strategy officer of EPF, Nurhisham Hussein had also previously shared that if approved, Akaun 3 will be automatically implemented for all new contributors, whereas existing members can opt-in to create the new account if they wish to.
The chief strategy officer of EPF, Nurhisham Hussein had also previously shared that if approved, Akaun 3 will be automatically implemented for all new contributors, whereas existing members can opt-in to create the new account if they wish to.
(Source: New Straits Times)
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