PETALING JAYA: As the Aug 31 deadline approaches for Malaysians to transfer their retirement savings from the Employees Provident Fund (EPF) Account 2 (Akaun Sejahtera) to Account 3 (Akaun Fleksibel), financial experts are urging citizens to consider their options carefully.
"Unless it's a true emergency or to pay off high-interest debt, we don't encourage people to make this transfer," says Lim Hooi Hooi, a licensed financial planner and the co-founder and managing partner of Coreplus Advisory Sdn Bhd.
"The long-term impact can be significant, as the EPF fund is meant for retirement and should be kept secure," she said.
For those who need or want access to their retirement savings, Lim said most would have made up their mind and made the transfer when EPF allowed it in May.
“Only a small number of them may hesitate, as they have concerns over the possibly lower future dividend rate for the flexible account.”
From their clientele, Lim said those most eager to access their EPF savings often face financial stress, such as credit card debt.
“However, we notice that some have used the withdrawn funds for non-essential purchases, rather than addressing their pressing needs.
"It's very concerning when people tell us they're losing sleep over their finances, but then use the EPF money to buy a new sofa.
"The mindset is crucial. We should not make it too easy for us to dip into our retirement savings,” she said.
For those certain they do not need the money in EPF Account 3, Lim suggested transferring the funds back to the more conservative Account 2 to boost returns.
She said the government should provide a window for such transfers in the future if they lower the Account 3 interest rate, as is common in flexible systems.
“Flexible retirement accounts typically offer lower interest rates, as governments must maintain liquidity rather than pursue higher-risk, higher-return strategies.
"It's good for the government to not announce anything, so there's another opportunity for people to decide what's best."
Emphasising the importance of proper financial education starting from a young age, Lim said the money habits and values we learn from our parents can have a huge impact.
“If we can break any negative 'money scripts' (financial habits) in this generation, we can pass on healthier financial practices to the next," she added.
Office administrator Jamal Mohammad Yunus, 43, said he made the transfer in July after his daughter was hospitalised with pneumonia.
"I eventually withdrew a small portion from the transfer and paid for my daughter's medical bill.
"I also used some money to buy her supplements. I'm thankful she is okay now and the EPF withdrawal helped," said the father of three from Shah Alam.
Despite transferring his EPF savings to Account 3, Jamal said he would only use it for emergencies.
A 38-year-old shipping company manager, who wished to be known only as Aaron, said he was still contemplating making the transfer.
"Honestly I don't need it. But I may withdraw it to pay for the downpayment of an apartment I wish to buy," he said.
Dietician Lai Jie Wei, 28, from Kuching, said she would stick to keeping her retirement savings for her old age.
"I'm not really good at saving a lot of money each month. So I think I should not dip my hands into my EPF savings, no matter what," she said.
