KUALA LUMPUR (July 11): The Employees Provident Fund (EPF) is looking to create a new account dubbed Account 3 to cater for informal workers, who will be allowed the flexibility of making withdrawals of any amount at any time.
“Hopefully, we will be able to address some of the cash flow concerns that informal sector workers have,” EPF chief strategy officer Nurhisham Hussein told a media briefing on Tuesday (July 11).
But he added that while the purpose of Account 3 is to address cash flow issues among informal sector workers, existing members may also voluntarily opt-in once the account is created.
“It is purely optional for the existing members," said Nurhisham, adding that those who sign up will be able to transfer their savings from Accounts 1 and 2 to Account 3 and be able to make unconditional withdrawals.
Accounts 1 and 2 are the pension fund's existing retirement saving accounts for members. Account 1 comprises 70% of members' savings, while Account 2 comprises the other 30% for discretionary withdrawals.
Nurhisham said that the creation of Account 3 is still under discussion, and could be realised in the next two years.
The account, he said, is primarily aimed at service and own-account workers. "So basically [it will cater to] business owners, as well as potentially those working in creative industries as well as professionals.”
“I think 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 [from Accounts 1 and 2]," he added.
As Account 3 would serve act as an emergency fund, Nurhisham said it will probably offer a lower dividend compared to the other two accounts.
It is worth noting that former finance minister Lim Guan Eng had previously proposed a special EPF account — also dubbed as Account 3 — to be created under the Malaysia@Work initiative that allows for flexible withdrawal. The account was supposed to be implemented in stages beginning from the second quarter of 2020, but did not proceed.