Nurhisham said that Account 3 is intended to help informal sector workers who currently do not enjoy good retirement savings coverage.
Interestingly, the third account – which will offer a lower dividend rate – is announced as one of EPF’s new reform measures to avert a major retirement crisis in the future.
While the percentage of contribution is yet to be determined, Nurhisham said about 5% to 10% of one’s monthly contribution could go into Account 3. “Hopefully, with this approach, it will be able to address some of the cash flow concerns that the informal sector workers have. EPF’s data shows that out of 11.1 million total non-formal workers in Malaysia and those outside the labour force, only 5% or 591,000 individuals are active contributors to the EPF.
“If we want to proceed with the Account 3 idea, we must have a clear legislation that prohibits withdrawals from Account 1 or 2, unless for certain reasons that are allowed currently such as education or housing,” he said. By 2035, the EPF aims to cover 80% of the labour force. Currently, it covers about 47% of the labour force, which is well below the global average of 68%.He also clarified that the recent proposal to introduce mandatory monthly withdrawal for retirees will only apply to members born in 2010 and onwards.
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