The Employees Provident Fund (EPF) is set to revolutionize its savings structure with the much-anticipated introduction of Account 3, also known as the "flexible account." This move, scheduled to be announced on April 25, aims to provide greater flexibility and options for EPF members, especially those below the age of 55.
Previously, EPF members below 55 years old had their contributions split between Account 1 and Account 2, with 70% going to Account 1 and 30% to Account 2. However, with the introduction of Account 3, this allocation will change. Moving forward, 75% of contributions will be allocated to Account 1, 15% to Account 2, and 10% to the new Account 3.
Account 1, which will be renamed Account Persaraan (Retirement Account), will continue to serve as the primary retirement savings account. Account 2 will be renamed Account Sejahtera, while Account 3 will offer members the flexibility to manage their savings according to their needs.
One of the key features of Account 3 is the ability for members to transfer funds from Account Sejahtera to the flexible account through an opt-in mechanism. Members will have until August 31, 2024, to opt in for the initial amount in Account 3, with the opt-in period running from May to August. This initial phase will be known as the accumulation phase.
For members who choose not to opt in for an initial amount in Account 3, their balance will start from zero until new contributions are credited. However, savings from the flexible account can be withdrawn by members at any time, with a minimum withdrawal amount of RM50.
Additionally, for EPF members with savings of less than RM3,000 in Account 2, RM1,000 will be transferred to the flexible account. The redistribution of existing funds from Account 2 will see one-third of the funds transferred to Account 3, one-sixth to Account 1, with the remaining balance staying in Account 2.
Despite the introduction of Account 3, EPF dividends are expected to remain in the same range. Account 3 will function like a savings account, allowing members to withdraw their savings at any time. The primary objective of introducing Account 3 is to provide EPF members with a tool to meet potential emergency cash needs, offering a safety net for unforeseen financial challenges.
Reference: EPF to announce Account 3 on April 25 | The Star
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