EPF Acct 2 Personal Loan
Earlier this year, the Ministry of Finance announced that the Employees’ Provident Fund (EPF) is looking to launch a flexible Account 3 initiative in April. According to details shared with the New Straits Times (NST), the highly anticipated Account 3 is expected to comprise 10 per cent of future monthly contributions that account holders can withdraw at any time.
More details on the facility is expected to be announced soon. However, NST has been made to understand that contributions to Account 3 will only begin from May onwards. Existing funds in Account 1 and 2 will remain untouched and Account 3 will start from zero balance. The main purpose behind the implementation of Account 3 is to help EPF members sustain their livelihoods before retirement.
The majority of EPF members’ monthly contributions (70 percent) are generally funnelled into Account 1, which they cannot access until retirement. The remaining 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.
The NST has learned that the new restructured system will see monthly contributions split three ways. 75 percent will go into Account 1, while 15 percent and 10 percent will go into Account 2 and Account 3 respectively. Contributors can withdraw from Account 3 at any time, similar to a typical savings account. It also appears that EPF members can also choose to transfer funds from Account 3 to both Accounts 1 and 2, if they wish to see greater capital gains.
The Account 3 initiative came about after several COVID-19 related withdrawal programmes drained up to RM145 billion from the EPF. As of December 2023, EPF’s investment assets stood at RM1.13 trillion.
As such, the proposal of Account 3 was to assist EPF members with emergency cash needs. It also aims to attract those in the informal sector to make contributions to the EPF.
As the money in Account 3 is not expected to be stored there for long periods of time, it will likely command lower returns overall compared to Account 1 and 2. However, the NST was made to understand that. Members who do not withdraw from their Account 3 might get a “token” payout much lower than the dividend for Accounts 1 and 2. It is currently not yet known how the yearly dividends will be calculated.
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