EPF’s Proposed Account 3 Allows People To Withdraw Funds Whenever They Like

Account 3 will function like a savings account and the funds can be withdrawn at any time.

For illustration purposes

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The debate about Employees Provident Fund (EPF) withdrawals has turned in a new direction now that the organisation is thinking of introducing Account 3.

EPF chief strategy officer Nurhisham Hussein said Account 3 is expected to be implemented for new contributors within two years.

Account 3 will technically function like a savings account and members can withdraw the funds at any time.

The creation of Account 3 is to meet the potential emergency cash needs of members. The savings rate for Account 3 will be between 5% and 10%.

Since it’s functioning like a savings account, this also means Account 3 will have lower dividends.

However, the contribution percentage for Account 1 will be increased. Members have the option to transfer the funds from Account 3 to Account 1 and Account 2 as well.

Nurhisham said the proposed Account 3 aims to attract those in the informal sector to make EPF contributions.

Currently, the EPF savings scheme structure for members under the age of 55 consists of Account 1 and Account 2 with a percentage rate of 70% and 30%.

Previously, former finance minister Lim Guan Eng proposed the establishment of a special EPF account, also known as Account 3, to allow for flexible withdrawal.

It was supposed to be launched in phases in the second quarter of 2020, but it did not proceed as planned.

Previous EPF withdrawal suggestions so far

A few days ago, reports indicated that the government plans to refine a proposal that allows new contributors to EPF to make periodic withdrawals.

EPF is looking into letting contributors born in or after 2010 make monthly withdrawals once they hit retirement age, instead of receiving a lump sum at 55 years old.

However, this option only applies to members who have opt-in voluntarily. It is believed that letting people withdraw monthly provides them with a better opportunity to manage their retirement funds.

This move sparked a debate with some people saying that retirees should be free to withdraw their money whenever it suits them.

Netizens believe everyone should be given the freedom to choose how they would go about withdrawing their EPF savings.

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