EPF proposes 'Account 3' for informal workers, allowing flexible withdrawals

SHAH ALAM - The Employees Provident Fund (EPF) is looking to create a new "Account 3" to cater to informal workers, which will allow flexible withdrawals at any amount, whenever needed.

Its chief strategy officer Nurhisham Hussien said in a media briefing that Account 3 mainly addresses the cash flow issues among informal sector workers.

"We hope we will be able to address some of the cash flow concerns that informal sector workers have," he said.

Nurhisham further said that those who sign up for Account 3 will be able to move their money from Accounts 1 and 2 to Account 3.

They will also be able to make unconditional withdrawals.

"It is purely optional for the existing members," he added.

Members' EPF savings currently consist of two accounts that vary by their share of savings and withdrawal flexibilities.

The first account, "Account 1", stores 70 per cent of the members' monthly contribution, while the second account, "Account 2", stores 30 per cent.

Account 1 and 2 are the pension fund's existing retirement saving accounts for members.

When asked about the effective date of Account 3, Nurhisham said that it is still under discussion and could be implemented in another two years.

"We are trying to accommodate the needs of the informal workers. But for existing members who don't think they have enough emergency funds, they can transfer their savings into Account 3," he said.

It was reported that on November 2019, then finance minister Lim Guan Eng proposed an EPF account (Account 3) under the Malaysia@Work initiative.

The account was supposed to be implemented in stages beginning in the second quarter of 2020. However, it was unsuccessful.