PETALING JAYA: Economists have lauded the flexible Employees Provident Fund (EPF) account announced by Prime Minister Anwar Ibrahim at the tabling of Budget 2024 on Oct 13.
According to Anwar, who is also the finance minister, EPF members will be able to access this account at any time, particularly during emergencies.
Malaysia University of Science and Technology professor Geoffrey Williams said the newly announced flexible EPF account will benefit contributors.
“This is a new option that will allow people to move a small sum into a savings account (maintained with EPF) where they will get a much better return than they could possibly get in a bank, but still have the flexibility of a bank account,” he told FMT.
Williams said the main difference between the flexible EPF account and a standard savings account lies in the superior returns paid out by the provident fund.
“If you have a fixed deposit at a normal bank, you’ll be lucky to get 3%. Whereas for EPF, you’re getting almost 6%,” said Williams.
Last year, EPF paid out dividends at the rate of 5.35%.
Universiti Malaya senior lecturer Goh Lim Thye said the introduction of a third flexible account is a strategic move.
“This innovation in financial security is poised to offer substantial relief amid life’s unpredictable nature,” he told FMT.
However, Goh said policymakers should ensure that the primary retirement fund is safeguarded for the implementation of this new account.
“They must ensure that at least 70% of the Account 1 savings remain untouched, thereby balancing immediate access with long-term retirement security.
“A hypothetical split could be 70:20:10, where 70% goes to Account 1 (retirement savings), 20% to Account 2 (housing, education, etc), and 10% to the new flexible emergency account,” he said.
FMT has reached out to EPF for the details of the new account’s features. - FMT
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