PETALING JAYA: An economist has hailed EPF’s introduction of a third account as a “win-win proposition”, saying it’s going to permit contributors flexibility in accessing their funds and enhancing their retirement financial savings.
Muhammed Abdul Khalid, a analysis fellow at Universiti Kebangsaan Malaysia’s Institute of Malaysia and International Studies, mentioned the allocation of funds beneath the brand new account construction strikes a “cheap steadiness”.
“This technique represents a center floor, and shouldn’t come as a shock.
“Once we opened the door for members to faucet into their retirement financial savings as we did in 2020 and 2021, the demand for additional withdrawals turned virtually inevitable,” Muhammed informed eNM.
He additionally mentioned Account 3 was a “much less damaging answer” to the wants of members requiring entry to money.
“Had EPF not allowed the 4 withdrawals in the course of the pandemic, amounting to roughly RM150 billion, the need for establishing Account 3 may not have arisen.
“However, what’s carried out is finished, and dwelling on previous selections serves little function,” he mentioned.
Monthly EPF contributions might be break up 3 ways from May 11: 75% into Account 1 (Akaun Persaraan), 15% into Account 2 (Akaun Sejahtera), and 10% into Account 3 (Akaun Fleksibel).
Savings within the versatile account might be withdrawn at any time for any function, at a minimal quantity of RM50.
Currently, 70% of EPF members’ month-to-month contributions are channelled into Account 1, which stays inaccessible till retirement. The remaining 30% is directed to Account 2, accessible for training, healthcare, housing, and a partial withdrawal at age 50.
Muhammed mentioned the 5% enhance in Account 1 contributions was EPF’s try to deal with the problem of balancing the strain from the individuals for speedy withdrawals with rebuilding retirement financial savings rapidly.
However, he mentioned the measure falls quick in addressing the broader ramifications of an ageing inhabitants, as not all employees possess EPF accounts.
Muhammed mentioned solely half of non-pensionable employees are at present enrolled in EPF, leaving a significant slice of Malaysian employees with out ample social safety.
“Ensuring complete retirement financial savings protection is crucial, with EPF at present obligatory solely for formal sector workers.
“Extending this obligation to embody all employees, notably these within the casual sector, is paramount,” he mentioned.
Muhammed additionally mentioned low-income wage earners with EPF accounts are in a deprived place as their financial savings are “approach too small”.
He mentioned the median financial savings in Account 2 for B40 people is roughly RM250, and about RM10 for the underside 10%.
“In different phrases, those that are essentially the most financially fragile both lack EPF protection altogether or have inadequate financial savings.
“A simpler strategy would entail the federal government taking proactive steps to boost the protection and adequacy of money help programmes. Such duty lies throughout the area of the federal government, quite than on EPF.”
