EPF finalises initiative for savings balance as backup for bank financing

The Employees Provident Fund (EPF) has finalised the mechanism as well as the terms and conditions for the Account 2 Support Facility (FSA2), to be implemented in two phases with Phase 1 beginning on April 7.

In a statement today, the EPF said members who meet the eligibility criteria can apply through participating banks, including MBSB Bank and Bank Simpanan Nasional.

It said it might consider adding more participating banks in the future.

"During Phase 1, which will begin on April 7, and remain open for one year, eligible members who are 40 years of age or older may apply, subject to the readiness of participating banks.

"The start date for Phase 2 for members under 40 years of age will be announced in due course," it said.
 
Under the facility, all Malaysian EPF members under the age of 55 can submit an advance notice of Age 50 or Age 55 Withdrawal, provided they have a minimum of RM3,000 in their EPF Account 2.

The maximum financing amount has been fixed at RM50,000, subject to EPF Account 2 balance, with a repayment tenure of up to 10 years.

According to the EPF, the interest rate (conventional) or profit rate (Islamic) to be charged by the participating banks under this programme will range from 4% to 5%, lower and more affordable than the current market rate of between 8% and 15%.

"If a member makes an advance notice for Age 50 Withdrawal, the EPF will pay the principal and accumulated dividend from Account 2 into the member’s financing account with the bank at any age between 50 and 54, as chosen by the member, subject to the maximum tenure of up to 10 years.

"If the member opts for Age 55 Withdrawal, the EPF will pay the principal and accumulated dividend from Account 2 into the member’s financing account with the bank at age 55," it said.

The EPF also said that the amount paid will be used to settle the remaining personal financing balance, if any, before any excess is returned to the member.

Savings will remain intact in the EPF Account 2 and with annual EPF dividends to continue as usual, thus allowing members to take advantage of the power of compounding their retirement nest egg while still addressing their short-term financial needs, it added.

"If a member fully settles their personal financing, they can notify the EPF to rescind their advance notice of Age 50 or Age 55 Withdrawal.

"Once the notice is rescinded, the amount applied for withdrawal (principal and accumulated dividend) in Account 2 can be used for other pre-retirement withdrawals from the EPF," it said.

The EPF said the facility offered a practical solution for EPF members who are facing temporary liquidity issues by providing cash flow through personal financing with minimal impact on their retirement savings.

Beginning April 5, members can visit https://fsa2.kwsp.gov.my to check their eligibility and the amount of personal financing that can be applied for under the facility.

Members are encouraged to register or update their mobile phone number via the self-service terminal available at any EPF branch to receive a transaction authorisation code to verify their identity when conducting transactions.

More information on FSA2 is available at www.kwsp.gov.my or through the EPF Contact Management Centre at 03-8922 6000.