WHILE the newly introduced Employees Provident Fund (EPF) Account 3 – otherwise known as Akaun Fleksibel (Flexible Account) – intends to meet the current needs of the public and assist them to tackle financial challenges, the drawbacks of this initiative cannot be ignored.
MCA’s vice president Datuk Lawrence Low noted that this is undoubtedly a “lifeline” for those in urgent need, enabling people constrained by immediate financial difficulties to utilise their EPF funds in advance to solve their cashflow problems, especially in cases of unemployment, illness and other emergencies.
However, he pointed out that the government’s rollout of the “Akaun Fleksibel” amid the ongoing economic downturn effectively shifts the burden onto individuals to “fend for themselves” using their own savings well before retirement.
“This approach is seen as lacking long-time consideration for the contributors’ welfare and future,” Low said in a statement on Tuesday (April 30).
“Instead, the government should explore avenues to boost people’s income and alleviate the cost of living, rather than placing the onus solely on citizens to depend on their EPF retirement savings to navigate economic hardships.”
Low, who is also the MCA Economic & SMEs Affairs Committee Chairman, said the government should instead implement measures such as providing financial aid and boosting national economic transformation efforts to raise employee income shares.
Elaborating, he said in the long term, prioritising financial education and structural reforms in the national economy are crucial for improving overall financial wellbeing and ensuring the people’s stable retirement.
“The new mandate requires all contributors to have a third account, with no option to opt out. For those who prefer not to have this account, they must personally instruct the EPF to set up a standing order to transfer funds regularly from the third account to the other two,” he remarked.
“As some individuals may not wish to withdraw EPF savings or be compelled to open a third account, imposing such restrictions could negatively impact their future retirement fund dividends, making them a disadvantaged group.
“The EPF should consider members’ opinions and needs. Hence, it is proposed that the EPF allows members to decide independently whether to transfer funds from the second account to the third account to protect their financial interests.” – April 30, 2024
Main pic credit: Reuters
