PETALING JAYA: The mechanism and the terms and conditions for the Employees Provident Fund (EPF) Account 2 Support Facility to obtain personal financing will be implemented in two phases - with Phase 1 opening for members who are 40 and above on April 7.
The fund said that Phase 1 would remain open for a year and Phase 2 opening for members under 40 would be announced later.
"During Phase 1, eligible members who are 40 years of age or older may apply, subject to the readiness of participating banks.
"Under the facility, all Malaysian EPF members below 55 can submit an advance notice of Age 50 or Age 55 Withdrawal, provided they have a minimum amount 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.
"The interest rate (conventional financing) or profit rate (Islamic financing) to be charged by the participating banks will range from 4% to 5%, lower and more affordable than the current market rate of 8% to 15%," said EPF in a statement on Monday (April 3).
It followed an announcement from the Finance Ministry on March 2, where the Account 2 Support Facility was aimed at helping EPF members apply for personal financing from banking institutions.
Savings in EPF Account 2 will serve as the basis for obtaining personal financing through an advance application for the Age 50 or Age 55 Conditional Withdrawal.
"However, this withdrawal is conditional, where the withdrawal payment will only be made to the banking institution when the member reaches the age of 50 to 55, as stipulated in the EPF Act 1951.
"The banks will fully administer the application process for personal financing through this facility, subject to their financing assessment and credit framework."
EPF said the personal financing application can be made online through participating banking institutions.
"Before applying, members need to ensure their eligibility in EPF Account 2.
"The application should be submitted according to the agreed terms and conditions with the banking institution. "Once approved, members can submit an initial application for Age 50 or Age 55 Conditional Withdrawal to the EPF based on the approved financing amount," it said.
The participating banks include MBSB Bank and Bank Simpanan Nasional (BSN), where more banks may be added in the future.
EPF noted that the facility is targeted towards members who have savings in Account 2 and are supported with a reasonable income to ensure they can afford the financing and repay it without compromising their retirement income adequacy and security.
"It offers a practical solution for EPF members who are facing temporary liquidity issues by providing cash flow through personal financing but with minimal impact to their retirement savings."
Explaining further, it said 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.
"The amount paid will first be used to settle the remaining personal financing balance, if any, before returning any excess to the member."
EPF also said members' savings would remain intact in EPF Account 2 and continue to receive annual EPF dividends, allowing members to take advantage of compounding their retirement nest egg, while still addressing their short-term financial needs.
If members fully settle 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 utilised for other pre-retirement withdrawals from the EPF, it added.
Beginning April 5, EPF members can visit https://fsa2.kwsp.gov.my to check their eligibility and to find out the amount they can apply for under the facility.
EPF also called on members to register or update their mobile phone numbers via the Self-Service Terminal (SST) available at any EPF branch to receive a Transaction Authorisation Code (TAC) to verify their identity when conducting transactions.
For more information on the Account 2 Support Facility, visit the EPF website at www.kwsp.gov.my, or call the EPF Contact Management Centre at 03-8922 6000.
