Following huge withdrawal rate, Wanita MCA fears EPF’s new flexi account can affect dividend payout

WHILE acknowledging the increased flexibility accorded by the Employees Provident Fund’s (EPF) Account 3 a.k.a. Akaun Fleksibel, Wanita MCA wants the retirement fund to address the pertinent concern over how high withdrawal rate from the third account may eventually affect dividend payout.

This is given since the May 12 to Aug 31 optional period for members to transfer one-third of their savings balance from their Akaun Sejahtera (Account 2) to their Akaun Fleksibel, EPF has approved a staggering 3.04 million withdrawal requests totalling RM5.52 bil as of May 22.

“Therefore, Wanita MCA expresses concern that this could impact the EPF’s investment capabilities and potentially reduce annual dividends for all members,” the women’s wing’s national chairman Wong You Fong pointed out in a media statement.

“To safeguard member interests and ensure sustained fund growth, we urge the EPF to explore alternative strategies. This might involve re-evaluating investment approaches and seeking more lucrative, stable investment channels.

“The goal is not only to maintain current dividend levels but potentially increase them for members.”

Recall that in order to improve the security of retirement income while meeting the life cycle needs of members, EPF had with effect from May 11 restructured accounts of its members aged under 55 from two to three accounts comprising the following:

  • Retirement Account (Account 1) to accumulate savings as income during retirement (75% of contribution);
  • Prosperity Account (Account 2) to address life cycle needs that contribute to well-being in retirement (15% of contribution); and
  • Flexible Account (Account 3) as a new account to provide flexibility for short-term financial needs whereby deposits in this account can be withdrawn at any time according to the member’s needs (10% of contribution).

Between May 12 and Aug 31, EPF members are given a one-time option to transfer part of their savings balance in the Prosperity Account (Account 2) as an initial amount into the Flexible Account.

If the member does not choose to have an initial amount, then no transfer will be made and the existing balance will remain in their Prosperity Account (Account 2) (click here for more details).

Elaborating further, Wong urged EPF contributors with approved Account 3 deposit to have the responsibility to use their retirement fund wisely or in a manner that aligns with the account’s purpose.

“Beyond emergency use as a safety net, members should consider utilising the funds for long-term financial planning and investment to maximise returns and benefits,” stresses the practicing lawyer and a non-independent non-executive director of Star Media Group Bhd.

Beyond that, Wanita MCA also recommended that EPF establishes retirement planning and support services for depositors.

“This would empower them to plan their golden years effectively as well as to secure sufficient funds for a comfortable retirement. Such services would not only enhance members’ financial security but also elevate the EPF’s image and service level,” suggested Wong. – May 29, 2024

Main image credit: Faizul Ridzuan Facebook

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