An introduction to the Employees Provident Fund’s new Account 3

If you haven’t already heard, the Employees Provident Fund (EPF) is changing the way monthly contributions are distributed with the launch of Akaun 3—AKA Account 3—for account holders aged 55 and below. Prior to the change, the funds being put into members’ accounts were divided using a 70:30 ratio for Account 1 and Account 2 respectively. 

Slated to happen on 11 May 2024, the introduction of Account 3 will mean the start of using a 75:15:10 ratio, with 10 per cent of contributions going into what will be known as Akaun Fleksibel or Flexible Account. To break this down for you, here is a quick guide to the changes and what they mean.

FOR CONTEXT

To fully understand the changes, we need to be clear on how EPF works in the first place. As mentioned above, 70 per cent of members’ monthly contributions initially went into Account 1, the main account meant for your retirement funds. Members would only be allowed to withdraw from this account once they stop working for good. The remaining 30 per cent would go into Account 2, which members can withdraw from for certain circumstances such as migration, education, housing, medical needs, and Haj.

With the launch of Account 3, the new 75:15:10 ratio will be in effect and members will have their savings distributed across all three accounts. Account 1 will be renamed as Akaun Persaraan (Retirement Account), whereas Account 2 will be known as Akaun Sejahtera (Sejahtera Account). 

HOW DOES ACCOUNT 3 WORK?

As opposed to the pre-existing accounts, Account 3—which only applies to members aged 55 and below—allows for members to withdraw their savings at any time without any conditions. All Flexible Accounts will be empty when the initiative begins, but members will have the option to “front-load” some savings from Account 2 into this new one. This option will only be given once and members will have until August 31 to decide. 

WHAT DOES THE “FRONT-LOAD” OPTION MEAN?

Those who opt in favour of the “front-load” can submit their application to do so on the EPF app on their smartphones or at any EPF office branch. They will then have a third of their current Account 2 savings moved into Account 3. Meanwhile, one-sixth of the Account 2 savings will be transferred into Account 1. 

WHEN CAN YOU WITHDRAW FROM ACCOUNT 3?

Those with funds in Account 3 can start to withdraw their money from 13 May onwards. The minimum amount will be RM50 and no other conditions apply. 

WILL DIVIDENDS BE AFFECTED?

The more you withdraw from Account 3, the lower your dividends will be. Therefore, if you leave this Flexible Account untouched, your dividend rate will remain the same. 

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