Malaysians at 50: Withdraw some, all, or let your EPF savings in Akaun Sejahtera grow? Here’s EPF’s take

KUALA LUMPUR (Nov 15): Did you know that at age 50, you can withdraw a portion of your Employees Provident Fund (EPF) savings, even though 75 per cent remains reserved for retirement?

So, what do these numbers mean, and how does it work?

First, you need to know that your EPF savings are grouped into three accounts: Akaun Persaraan (retirement account), Akaun Sejahtera (wellbeing account), and Akaun Fleksibel (flexible account).

This means:

• 75 per cent of your EPF savings will be in Akaun Persaraan (locked until age 55 for retirement),
• 15 per cent in Akaun Sejahtera (locked until age 50 for a one-time withdrawal OR pre-retirement needs such as housing and education before you reach age 50),
• 10 per cent in Akaun Fleksibel (you can withdraw the money at any time for emergencies).

Let it grow! If you can, don’t make any withdrawals

So, you’ve reached the 50-year milestone — Happy Birthday! Now the question is, should you withdraw the full amount or just a portion of your Akaun Sejahtera savings?

How would you decide? (Remember, you can only apply one time during age 50 to 54 to withdraw from your Akaun Sejahtera.)

When making this decision, EPF said there are two aspects to consider, namely Akaun Sejahtera’s purpose, and a 50-year-old individual’s financial needs.

“Akaun Sejahtera is designed to support the life cycle needs of individuals, contributing to their wellbeing during retirement.

“At the age of 50, if an individual is still employed, earning a steady income and has no immediate financial obligations requiring a withdrawal from Akaun Sejahtera, it is advisable to leave the savings untouched for retirement.

“These savings in the Akaun Sejahtera will continue to grow through dividends and benefit from the power of compounding,” it said.

Tips to get the biggest benefits from the three accounts in your EPF savings

EPF explained that the three accounts are designed to help EPF members plan effectively for retirement by balancing their short-, medium-, and long-term financial needs.

To recap, the purpose of the three accounts are: Akaun Persaraan (to accumulate savings that will serve as a source of income during retirement); Akaun Sejahtera (to address pre-retirement needs in your life cycle which will contribute to your overall wellbeing during retirement); Akaun Fleksibel (to allow withdrawals any time depending on immediate requirements for short-term financial needs.)

If you want to make the most of these three accounts, EPF said its members should use their savings “strategically based on their financial priorities”:

• “Akaun Persaraan should primarily be preserved for long-term retirement income.
• “Akaun Sejahtera can be tapped into for important life events or needs during retirement, but it is advisable to leave these savings untouched to continue growing with dividends.
• “Akaun Fleksibel provides the flexibility to meet short-term financial needs, but members should withdraw only when necessary to avoid diminishing their overall savings.”

What’s the best thing about not taking out money from your EPF savings in Akaun Sejahtera or Akaun Fleksibel? Your savings will continue to grow.

“If members choose not to withdraw from Akaun Sejahtera or Akaun Fleksibel, their balances will continue to earn dividends, allowing savings to accumulate further for retirement.

“By carefully managing these accounts, members can ensure they are financially prepared for both short-term challenges and long-term security in retirement,” EPF said.

If you had to take money out, put money back in when you can

The EPF said “the primary purpose of EPF savings is to ensure a secure retirement”, and said EPF members can get advice from its trained Relationship & Advisory (RA) officers before making big decisions on taking money out from EPF savings.

“While the EPF offers withdrawal schemes for essential life cycle needs such as housing, education and health, these withdrawals should be made with careful consideration and are subject to certain conditions,” it said, referring to the withdrawals allowed from Akaun Sejahtera even before age 55.

“It is crucial for members to prioritise long-term financial stability, and we strongly encourage consulting EPF RA Officers before making any major withdrawal decisions. They can provide valuable guidance to help members weigh their options and make informed choices that balance immediate needs with retirement planning.

“After a withdrawal, members should focus on replenishing their retirement savings to maintain financial security in their later years,” EPF told Malay Mail.

EPF said one of the effective ways to do this is through Voluntary Contributions, where EPF members can top up their EPF savings periodically.

For Voluntary Contributions, you can add in extra money to your EPF savings, with the minimum amount being RM1 and the maximum annual limit being RM100,000.

The maximum RM100,000 limit would cover all types of Voluntary Contributions made in a year, including i-Saraan which EPF said offers a convenient option for those in the informal sector to build their retirement fund.

“By making additional contributions, members can benefit from annual dividend returns, allowing their savings to grow steadily over time, ultimately securing a more comfortable and financially stable retirement,” EPF told Malay Mail.

The dividends for EPF members last year was 5.5 per cent (conventional savings) and 5.4 per cent (Shariah savings).

While the minimum annual dividend for EPF savings under the law is 2.5 per cent, EPF has consistently delivered dividend rates higher than that guaranteed figure for the past 64 years. — Malay Mail