This Content Is Only For Subscribers
KUCHING, July 12: The Employees Provident Fund (EPF) has clarified that the mandatory monthly withdrawal option being proposed will only be applicable to new members who were born in or after 2010 and registered with the EPF after the implementation date.
According to multiple media outlets, EPF has emphasised that the current lump sum withdrawals at age 55 and 60 for existing members will remain unchanged.
It was also stated that the current EPF monthly withdrawal option is only available to members who opt in voluntarily.
The statutory body mentioned that the proposal was still being refined and that the first such payout under the mandatory option would not be made until those new members retired decades in the future.
EPF also assured that any decision regarding the mandatory monthly withdrawal option would be made after careful consideration and in accordance with the EPF’s commitment to the best future interests of its members.
“The mandatory monthly withdrawal mechanism will bring Malaysia in line with widespread global practices, as our country remains one of the very small minority that continues to allow lump sum withdrawals and not a regular payout,” EPF said, as quoted by news reports.
Previously, EPF chief executive officer (CEO) Datuk Seri Amir Hamzah Azizan stated that implementing such a mechanism would provide members with an improved method of managing their retirement funds.
Additionally, members would have the opportunity to receive annual dividends for the remaining savings they have with the fund.
In a separate development, EPF intends to establish a new account, Account 3, for informal workers, who will be permitted to make withdrawals of any amount at any time.
EPF chief strategy officer Nurhisham Hussein expressed hope that it would be able to address some of the cash flow concerns that informal sector workers face.
While the purpose of Account 3 is to address cash flow issues among informal sector workers, he added that existing members may voluntarily opt-in once the account is created.
Nurhisham highlighted that it is entirely optional for current members, and those who sign up will be able to transfer their savings from Accounts 1 and 2 to Account 3 and make unconditional withdrawals.
Accounts 1 and 2 serve as the retirement saving accounts for members of the pension fund. Account 1 holds 70 per cent of the members’ savings, while Account 2 holds the remaining 30 per cent for discretionary withdrawals.
According to Nurhisham, the creation of Account 3 is currently being discussed and there is a possibility that it will be implemented within the next two years.
He mentioned that the account is primarily intended for service and own-account workers. Essentially, it will cater to business owners, professionals, and potentially individuals working in creative industries.
“I think we are trying to accommodate the needs of the informer workers. But for [existing members who] don’t think they have enough emergency funds, they can transfer [their savings] into Account 3 [from Accounts 1 and 2],” he added, as quoted by news reports.
In addition, Nurhisham mentioned that Account 3’s dividend is anticipated to be lower because the account functions as a savings account. — DayakDaily
