EPF Akaun Fleksibel Is A Good Thing For Malaysians

The launch of EPF’s Account Fleksibel (Account 3) has been met with polarising opinions from Malaysians advocating for both sides of the equation.

A survey conducted by The Star highlights this polarising opinion concerning transferring funds from their Akaun Sejahtera (Account 2) to the new Account 3. Those who would not opt-in lead slightly in the survey at 45.36% over those who would at 43.02%, while the remaining were undecided.

While both sides have valid points, this writer believes that ultimately, having access to EPF Account Fleksibel is a good thing overall and here’s why.

What is EPF Akaun Fleksibel and its purpose

Before we go into why you should have an EPF Account 3, let’s go into a quick explanation of what it is and how the new EPF system works. If you want a more detailed explanation, you can refer to our article here.

EPF renamed the EPF Account 1 and 2 into Akaun Persaraan and Akaun Sejahtera respectively, with the new Account 3 being introduced as Akaun Fleksibel.

Akaun Fleksibel is the new account you can access/withdraw at any time and use for short-term financial needs with 10% of your income contributions going into this account.

The purpose of Akaun Fleksibel is to act as a savings account that you can access anytime and use to pay for things you need to pay.

And that flexibility can be an immense help to a lot of people, especially given that 50% of Malaysians are unable to earn the minimum living wage, making them more susceptible to financial struggles such as having enough to pay for rent or buying food.

Of course, there are concerns with having easy access to your EPF funds, such as misusing it or not having enough money for retirement.

But are those concerns legitimate? It might not be.

Misusing/abusing of EPF flexible funds among Malaysians

One of the major concerns when the government announced the special withdrawal of EPF during the pandemic, was that Malaysians might use those funds for purposes that might not be necessary, such as to buy a car.

While there have been cases of people using the EPF special withdrawals to buy and pay for luxuries such as purchasing gold or using it for investment purposes, the numbers were much smaller compared to members using it to pay for necessities.

A study released by EPF showed that a high proportion of respondents who took the i-Lestari (85%) and i-Sinar withdrawals (77%), used them to pay for daily expenses such as food, groceries, electric bills, and utilities.

Those who used it to buy luxury items, gold, or investments, amount to only 7.6% (i-Sinar) and 4% (i-Lestari). This shows that statistically when allowed to withdraw funds, Malaysians would be more likely to do it to pay for necessities instead of misusing it.

It will affect your EPF retirement funds in the long run

Yes, it will affect your retirement funds.

Using your income from Akaun Fleksibel will affect your retirement funds in the future, especially if you’re a B40 as you’re more likely to have lesser amounts in your EPF funds.

The reason is that, when you take out funds from your EPF, you will earn less from the dividends and minimise the amount of funds you will have when you retire (unless you’re able to replace the amount you’ve taken out).

And for now, Account 3 will share the same dividend rate as Account 1 and Account 2, With EPF announcing a dividend rate of 5.50% for the Simpanan Konvensional this year, you can safely treat it as a high-interest savings account.

HOWEVER!

Bear in mind that the dividend rates between the three accounts could change in the future, says EPF chief executive officer Ahmad Zulqarnain Onn as “by default, liquid assets do not attract higher interest rates or dividends”.

Plus, the point of having a retirement fund is so you can enjoy your hard-earned money when you reach retirement age. Those funds become pointless if you can’t survive today when you don’t have any money to pay for food, rent, or even unexpected emergencies.

And given how many Malaysians are struggling to make ends meet and are expected to deal with even more financial stress due to numerous factors such as the proposed subsidy cuts for petrol in 2024, at times of desperate need, the ability to use your EPF funds immediately far outweighs having it when you retire.

EPF Akaun Fleksibel is good to have, but not to rely upon

While I believe that having the EPF Akaun Fleksibel will do more good to help people than it will damage their retirement funds, it doesn’t mean that we should rely on it to ensure our financial health.

Using your EPF funds should only be a last resort and should only be considered when you’ve used up all financial options available to you.

Of course, it doesn’t mean that you should just leave your Account 3 untouched altogether. If you’re financially smart and disciplined, you could use that to make more aggressive investments that yield higher returns compared to EPF. It won’t be guaranteed returns like the EPF, but you could always average it out over a long period of time.

At the end of the day, Instead of relying on your EPF, you should focus on building up your emergency funds, having proper insurance, and any financial safety nets necessary to protect in case you end up in a bad financial situation.

The views expressed are solely of the author and do not necessarily reflect those of iMoney Malaysia.