Everything to know on EPF's flexible 'Account 3': How much you can withdraw? (2024)

Retirement may seem far off on the horizon for many of us, but it doesn’t hurt to stow aside a few pennies in preparation for it when the time comes. In the context of Malaysian employees working within the private sector, this takes the guise of the Employee Provident Fund (EPF), which has recently introduced a brand-new Account 3 in its contribution structure to keep pace with the financial needs of the common layperson.

As an organisation, the Employee Provident Fund (EPF) has been around since 1951, but it wasn’t until 1991 that Malaysian private sector employees had to contribute to the fund by law, as per the EPF Act 1991. Traditionally, each individual’s EPF fund is split into two accounts: around 70% of an individual’s income contribution to the fund goes into Account 1, which is only accessible upon one’s retirement at 55 years old.

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EPF Account 3: Everything to know about this new ‘flexible’ withdrawal scheme

On the other hand, the remaining 30% of one’s EPF contribution goes into Account 2 and can be withdrawn under conditional request. Typically, this involves financing medical costs for the individual or their close family members and purchasing a home.

But effective May 11th, all contributing EPF members will now have an additional account, dubbed Account 3. As the organisation explains, this new structure was implemented to grant contributors more financial flexibility, while improving their sense of income security by granting them access to the otherwise restricted amounts parked in their EPF accounts.

As it now stands, the new ratio is as follows:

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

For instance, if an individual’s monthly EPF contribution from their salary amounts to RM500, the amount will be split as follows:

  • Account 1: RM375
  • Account 2: RM75
  • Account 3: RM50

EPF explains that upon the implementation of Account 3, all balances in an individual’s Account 1 and Account 2 will remain unchanged. This means that Account 3 will begin with a zero balance and will only begin receiving fresh contributions upon an individual’s next pay cycle.

How much money can you move between your EPF accounts?

With that said, those hoping to move some of their EPF funds from Account 2 to Account 3 for ease of access may do so by submitting a one-time request between 12th May 2024 to 31st August 2024. The approval and amount transferred are subject to whether an individual’s balance in Account 2 is above or below RM3,000.

If the amount in your Account 2 exceeds RM3,000, one-third of the amount will be allocated to Account 3 while one-sixth will go to Account 1. Whatever remains will be left in your Account 2. For example:

Assuming that your Account 2 has RM30,000 and you wish to have an initial amount in your Account 3, this will be the breakdown.

  1. RM5,000 or one-sixth of your Account 2 amount will go to Account 1.
  2. RM10,000, or one-third of your Account 2 amount will go to Account 3.
  3. The remaining RM15,000 will be kept in your Account 2.

For individuals with less than RM3,000 in their Account 2, only a maximum of RM1,000 can be moved to Account 3. For instance, assuming you have only RM1,500, you can move RM1,000 to Account 3 with the remaining RM500 to be kept in Account 2.

This action cannot be undone, so be sure to think it through.

As for withdrawing from your Account 3, you may do so through the KWSP i-Akaun app. Every withdrawal will require a turnaround time of 7 days from the initial withdrawal request, and the amount will only be credited to an active bank account bearing the same name as the EPF account holder. Withdrawal amounts start from a minimum of RM50 and is capped at RM30,000. Any amount above RM30,000 will require physical verification with EPF.

According to a statement on the matter, all three accounts will receive the same dividends for the time being. Which is to say that regardless of where you park your money, the rates you receive for keeping it in either Account 1, 2, or 3, will remain unchanged.

For more information concerning the latest changes in EPF structure, visit the organisation’s official website here.

Feature and hero image credits: pixabay/Pexels, Towfiqu barbhuiya/Pexels

Everything to know on EPF's flexible 'Account 3': How much you can withdraw? (2024)
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