It appears that the Employees Provident Fund is trying to strike a balance between flexibility and security, ensuring members can enjoy both present financial flexibility and future stability.

The Employees Provident Fund (EPF) is Malaysia’s go-to retirement savings plan, and it recently had a makeover that got everyone buzzing. The new structure divides your EPF savings into three accounts: Account 1 (retirement), Account 2 (health), and the shiny new Account 3 (flexible).

This is supposed to give members more flexibility, catering to their various needs. But is it really the smart move we need, or are we setting ourselves up for a retirement disaster? Here are some thoughts.

As of July 19, some 3.8 million or 29.3% of the 13.1 million EPF members under 55 have opted to have an initial amount in their Flexible Account, with a total transfer amount of RM12.6 billion, while RM5.6 billion has been transferred to Account 1.

The latter transfer has resulted in increased member savings, with an additional 43,000 new members achieving basic savings. Meanwhile, 3.4 million members, or 26.2% of the 13.1 million EPF members under 55, have made withdrawals from the Flexible Account amounting to RM8.9 billion.

According to second finance minister Amir Hamzah Azizan, these withdrawals have not significantly impacted EPF as the amounts fall within the Strategic Asset Allocation, which assigns 2-6% of EPF’s investment assets to cash and money-market instruments.