Under the newly restructured plan, EPF members now have three accounts compared with the previous two. 

Seventy-five per cent of an individual’s monthly contribution will now go into Account 1, 15 per cent into Account 2 and the remaining 10 per cent will go into Account 3 – the new flexible account.

Previously, 70 per cent of the contributions were deposited into Account 1 and 30 per cent into Account 2. The money in Account 1 cannot be withdrawn until a member reaches the age of 55 while funds from Account 2 can be withdrawn for purposes such as housing. 

Senior fellow with the Singapore Institute of International Affairs Oh Ei Sun told CNA that there appears to be two objectives to the move by EPF: One, which is to increase contributions into Account 1 and the other, to give members some flexibility in how they choose to utilise their funds. 

Dr Oh said that the increase in allocation of funds to Account 1 enables EPF to “lock up” an extra five per cent for the long term, hence increasing its cash reserve and liquidity. 

As of December last year, EPF had 16.07 million members, of which 8.52 million are active members. This represents 50 per cent of Malaysia’s 17.03 million labour force as at the end of 2023.

The EPF – one of the world’s largest retirement funds – has assets worth RM1.135 trillion.  

“(The change) serves two objectives at the same time. The first is a financial objective benefitting EPF but the second is a crowd-pleasing political objective,” said Dr Oh, referring to the move to allow members flexibility in using their EPF deposits. 

He believes that the move was partly motivated by the pressure from the opposition coalition to allow further withdrawals from the EPF.     

Between 2020 and 2022, through four rounds of COVID-19 withdrawals, 8.1 million Malaysians took RM145 billion out of the retirement fund. The withdrawals were first approved when the country was led by then prime-minister Muhyiddin Yassin and continued under the leadership of Mr Ismail Sabri Yaakob.

Muhyiddin is currently the chairman of the opposition coalition Perikatan Nasional, which counts Islamist party Parti Islam Se-Malaysia (PAS) as well as Malay nationalist party Parti Pribumi Bersatu Malaysia (Bersatu) as among its members. 

After the 15th general election in Nov 2022, Muhyiddin had urged the government to allow another round of EPF withdrawals for those in need.  

However, Prime Minister Anwar Ibrahim had said in May last year that even though it was not a popular decision, contributors’ savings must be protected so that they will have money for future use.

“Even though there is much political pressure to approve another round of withdrawals, I stand firm on my decision as EPF is a legal body which is there to protect contributors’ money now and for future,” he was quoted as saying by the News Straits Times.

Later during the tabling of the 2024 Budget in October, Mr Anwar appeared to have backtracked from his earlier position to announce that the government would be introducing a flexible EPF account that allows contributors to access the funds inside at any time.


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