SINGAPORE: Malaysians have withdrawn some RM7.81 billion (US$1.66 billion) from their retirement savings following the restructuring of the country’s national pension fund in May.
The latest numbers – taken as of Jun 24 – was an increase from the RM6.98 billion that had been taken out as of Jun 10.
The New Straits Times reported on Wednesday (Jul 10) that some 3.16 million Employees Provident Fund (EPF) members under the age of 55 had made such withdrawals from their “flexible” account.
EPF – which is Malaysia’s retirement fund – is one of the world’s largest retirement funds, with assets worth RM1.19 trillion. It allowed its members to withdraw money from this account to fund their short-term financial needs after a restructuring plan that took effect from May 11.
CNA has previously reported that reactions to EPF restructuring have been mixed, with some experts cautioning that the move may exacerbate a retirement crisis in the future.
There was also concern that early withdrawals could also lead members to miss out on the compounding factor of the savings scheme.
Meanwhile, others have said that the move allows its members some flexibility in how they choose to utilise their funds.
Previously, EPF members who had not reached the age of 55 could only make withdrawals for certain specific purposes. But following the restructuring plan in May, EPF members under the age of 55 now have three accounts instead of the previous two.
Under this restructured plan, 75 per cent of an individual’s monthly contribution will now go into Account 1, 15 per cent into Account 2 and the remaining 10 per cent will go into Account 3 – the new flexible account.
Previously, 70 per cent of the contributions were deposited into Account 1 and 30 per cent into Account 2. The money in Account 1 cannot be withdrawn until a member reaches the age of 55 while funds from Account 2 can only be withdrawn for purposes such as housing, healthcare and education among others.
EPF members have until Aug 31 to make a one-time transfer of one-third of their savings from Account 2 to Account 3.
According to the New Straits Times, the Finance Ministry said that 3.61 million people – or 27.8 per cent of the total EPF members under the age of 55 – have transferred money to their Account 3.
To date, some RM11.52 billion has been moved to the flexible account that can be easily tapped.
Meanwhile, RM5.12 billion was transferred to Account 1 with the restructuring of the EPF funds.
