EPF’s Account 3 Could Be Landing Soon – Proposed Details Making Rounds

EPF’s Account 3 Could Be Landing Soon – Proposed Details Making Rounds

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Some initial details about the Employees Provident Fund’s (EPF) Account 3 aka the Flexible Account are making rounds on the web.

According to the New Straits Times, 10% of future monthly contributions will be channelled into Account 3. The funds in Account 3 can be withdrawn by the account holder any time.

NST said only contributions from May onwards would be used for Account 3 while existing funds in Accounts 1 and 2 will remain untouched. In other words, Account 3 will start with zero balance.

The need for a third account arose after the Covid-19 pandemic had seen many people drain their savings to sustain their livelihoods before they hit retirement age.

The current contributions are split into:

• 70% of members’ monthly contributions are channelled into Account 1 and it’s inaccessible until after retirement.
• The other 30% goes to Account 2, which can be accessed to pay for education, healthcare, and housing, in addition to a partial one-time withdrawal at age 50.

In the restructured system, the monthly contributions could possibly be split three ways:

• 75% into Account 1
• 15% into Account 2
• 10% into Account 3

For those who do not want to withdraw money from Account 3, they can transfer those funds into Accounts 1 and 2 to maximise capital gains.

Since the funds in Account 3 are expected to remain for a short time, the account will likely command lower returns than the other accounts.

NST added that members who do not withdraw from Account 3 might get a “token” payout much lower than the dividend for Accounts 1 and 2.

The exact details and mechanism for Account 3 are expected to be announced soon, so brace for any changes.

Netizens’ reactions to EPF’s Account 3

The addition of Account 3 has drawn mixed responses from the public. Aside from worrying about longterm financial security of members, there are concerns about being forced to save in an account offering lower returns.

Those worried about lower returns said Account 3 should be non-mandatory and be made a flexible deposit and withdrawal account to attract funds from other sources than the usual salary contributions.

This way, EPF get more funds to invest without affecting the existing funds in accounts 1 and 2 and members get more returns on their savings.

There were also concerns that Account 3 would lead to some people refusing to work or carelessly spending their savings before retirement.

On the other hand, some are excited about the potential of Account 3. A netizen said it would be good if Account 3 is flexible like ASB since EPF consistently pays a 5% dividend.

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