EPF news: 3.8 million EPF members transferred RM12.6 billion into Flexible Account!

EPF news: 3.8 million EPF members transferred RM12.6 billion into Flexible Account

We used to have just two EPF Accounts until recently. Now, we have three. They are as follows:

The last account; Flexible Account allows the member to withdraw money from this account anytime. As long as there is money inside the account. This is the explanation. “Akaun Fleksibel is designed to meet members’ short-term financial needs. Savings in Akaun Fleksibel can be withdrawn by members any time, subject to terms and conditions. However, members are encouraged to withdraw only for emergency purposes and immediate needs only.” Source: https://www.kwsp.gov.my/en/account-restructuring

Latest news about this Flexible Account?

Article in thestar.com.my KUALA LUMPUR: A total of 3.4 million of the 13.1 million Employees Provident Fund (EPF) members under the age of 55 have made withdrawals from the Flexible Account amounting to RM8.9bil as of July 19, 2024, says Datuk Seri Amir Hamzah Azizan.

The Finance Minister II said that for the same period, a total of 3.8 million or 29.3% of EPF members chose to have the initial amount in the Flexible Account (Account 3) with a transfer of RM12.6bil, while RM5.6bil was transferred to the Retirement Account (Account 1).

He said the transfer to the Retirement Account increased members’ savings, with the addition of 43,000 new members reaching the basic savings level. Do refer here for the full article: Article in thestar.com.my

What does this mean for these members who has transferred the amount to Flexible Account?

They may be tempted to use the money in this account. RM12.6 billion transferred and 3.8 million EPF members means it’s an average of RM3,316 per EPF member. While this is not a big amount on average but I think the numbers may be skewed towards much bigger amounts and much lower amounts versus everyone transferring very close to the average number. This RM3,316 is the value today. It will easily double or triple by the time the EPF member retires. So, it is a loss of up to three times the value today and it will definitely affect the amount of money available in the EPF when one retires if the money has been withdrawn and spent today.

Some say they know how to invest better than the EPF

I would not want to doubt the fact that some may believe they know how to invest better than the EPF and thus they are withdrawing to invest the money themsevles. After all, the EPF’s returns are ONLY above the FD rate year after year… right? The below is the chart showing the dividends from the EPF for the past many years. Briefly, they are good numbers.

I am not that someone, I shall just forget about EPF until the time when I retire. For now, I am perfectly fine to spend within my means and just have that extra peace of mind knowing that if I need a vacation, I can go for a vacation… in Langkawi lah. Haha.

This was the earlier article about EPF which is very interesting and important to note as well: RM7 billion today may be RM14 billion 12 years later.

Last but not least would be a goal all of us may want to have as the minimum achievement for EPF savings. How about aiming for RM 1 million? (Read here)

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