EPF News: RM15 billion withdrawal from Account 3 is not good news
This is the purpose for Account 3: “The Akaun Fleksibel offers you the convenience to access savings at any time to address emergencies and immediate needs, subject to terms and conditions. It is important to use this facility wisely and responsibly when making withdrawal decisions, to ensure your retirement savings remain adequate. Good financial planning is crucial for long-term financial stability and your overall well-being.” Source: kwsp.gov.my
The purpose is clear. It’s supposed to be for emergencies and immediate needs. The emergency, I understand. The immediate needs, not so. Perhaps this is also why so many people were able to withdraw the money from their Account 3 aka Flexible Account. The below is the article with all the details. A big number of members have withdrawn the funds they have.
Article in theedgemalaysia.com. KUALA LUMPUR (Aug 13): A total of RM14.79 billion had been withdrawn from the Employees Provident Fund’s (EPF) Flexible Account, also known as Account 3, just over a year since its launch, according to the Ministry of Finance (MOF).
Account 3 was introduced in May 2024 to provide more flexible access to EPF savings for short-term financial needs.
The MOF said the withdrawals were made by 4.63 million EPF members, representing 35.14% of the 13.2 million members below the age of 55.
“The total remaining balance in the Flexible Account stood at RM10.16 billion,” the ministry said in a written parliamentary reply to Datuk Seri Shahidan Kassim (PN–Arau). Article in theedgemalaysia.com.
Yes, I know, it’s FULLY up to the members to decide
Well, as the name suggests, it is UP to the EPF members to decide if they like to withdraw the money. EPF did warn that this should be used wisely and responsibly. I am just not sure if all the members who withdrew the money realized that the actual amount they are withdrawing is not just the total of RM15 billion. With typical divided rate of 5 percent per annum, this RM15 billion is equivalent to RM60 billion when one retires 30 years late.
Briefly, the money doubled twice. Every 14.5 years, the amount doubles, so at 15 years, the money doubled from RM15 billion to RM30 billion. This RM30 billion will double again in 15 years time. That’s a total of RM60 billion in 30 years which has been withdrawn today.
Let’s hope everyone sobers up that if it’s really for an emergency, then one has no choice. Any other thoughts of using the money for any other needs should just be curbed. I just shared with my Toastmasters club members that if we intend to buy anything online, just refrain from buying it for 2 weeks and we will realize by then whether we actually need the item or not…
Happy deciding.
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