KUALA LUMPUR, April 26 — The Employees Provident Fund (EPF) announced yesterday a much-anticipated restructuring of contributors’ accounts that would allow some portion of their retirement fund to be withdrawn anytime.

The fund said the move is meant to be a major recalibration to change a decades-long system put in place to help private sector workers build old-age savings.

Ahmad Zulqarnain Onn, its chief executive officer, said the new scheme is meant to "empower” contributors through some flexibility on how to manage their retirement savings.

What is it?

Under the new system, all contributors will have their savings distributed between three accounts beginning May 11.

The percentage of contribution that goes into the first account, to be renamed "Persaraan”, will now be 75 per cent, five higher than under the replaced system. Fifteen per cent of savings will then go into the "Sejahtera” account.

The remaining portion will go into the third and new account, dubbed "Fleksibel”. This account will be the portion of savings that contributors can withdraw from.

How does it work?

All contributors can withdraw from the Fleksibel account which will start with zero balance. However, contributors will be given a one-time option to "front-load” some of their account 2 savings into the third account.

Those who want to front-load will see a third of the 30 per cent savings they currently have in account 2 credited into the Fleksibel account, while a sixth of it will be credited into the Persaraan account.

When can contributors withdraw?

As early as May 11. Once a contributor chooses to front-load, the money will be credited into the third account with the option to withdraw after May 13. Application to front-load can either be done on the EPF smartphone application or at any EPF branch offices.

Are there conditions to withdraw?

No. The lowest withdrawal amount permitted is RM50, and can be withdrawn anytime. Any contributor age 55 and below will have until August 31 to decide if they’d want to front-load or not.

Will it affect the dividend rate?

Any withdrawals will affect the dividend rate similar to the previous system. The more a contributor withdraws, the lower the rate.

Inversely, this means a contributor’s dividend rate will not be affected if the contributor keeps his or her Fleksibel account untouched, even after they opted in to front-load.

Any implications if you opt in?

EPF officials believe only half of all active contributors will opt in, a conclusion based on data of Covid-19 special withdrawals between 2021 and 2022.

The fund projected some RM25 billion would be withdrawn in the initial three-month offer period, while the monthly withdrawals after the front-loading phase would be around RM4 billion to RM5 billion, something the fund can manage, according to Ahmad Zulqarnain.

The CEO also said the 5 per cent increase in contribution for the first or Persaraan account could offset the withdrawals, and raise "most” contributors’ retirement savings. Still, Ahmad Zulqarnain advised against touching or limiting withdrawals as much as possible.