On 9th March 2023, PM Anwar Ibrahim, who is also the finance minister, announced that the government is deliberating to greenlight the use of EPF savings as collateral for emergency loans, following repeated calls from the Opposition to allow further withdrawals.
Anwar pointed out that this would only apply to those who are really struggling with their financial circumstances.
Anwar pointed out that this would only apply to those who are really struggling with their financial circumstances.
Fast forward to today (3 April 2023), the Employees Provident Fund (EPF) announces that it has finalised the mechanism as well as the terms and conditions for the use of Account 2 savings as support for loan applications.
What is Account 2 Facility Support?
(FSA2 = Fasiliti Sokongan Akaun 2)
The Account 2 Support Facility (FSA2) is designed to assist EPF members in obtaining personal financing from banking institutions. Savings in Account 2 will be used to pay for this financing through the advance application of the Age 50 or Age 55 Conditional Withdrawal.
The advance application allows members to consider using their savings in Account 2 to obtain personal financing from participating banking institutions where the payment will only be made to the banking institutions when the member reaches the age of between 50 to 55, depending on the member’s choice of withdrawal age.
What are the terms and conditions for applying?
- Open to EPF members who have yet to reach the age of 55.(Phase 1: Members aged 40 - 54 years old)
- Malaysian citizens.
- Application is one-time only.
- Application cannot be cancelled once approved.
- Application is open within a period of one year (12 months) from the implementation date which will be announced later.
- Minimum savings amount of RM3,000 in EPF Account 2.
- The maximum amount for conditional withdrawal is not more than RM50,000.
- The withdrawal amount will be paid to the banking institution when the member reaches the chosen withdrawal age between 50-55 years old.
- Fulfill the terms and conditions set by the banking institution applied for.
Note: Members are required to undergo a Financial Awareness Assessment with the banking institutions before deciding to take on personal financing. Throughout the financing period, members can seek further consultation with EPF Retirement Advisory Service (RAS), AKPK, or the banking institutions’ financial advisor, if needed.
How can we apply for it?
Applications can be made online through participating banking institutions. There are 3 main steps that members need to take:
- Check EPF Account 2 eligibility through the EPF portal or the participating banking institutions’ portal;
- Apply for personal financing via the participating banking institutions’ portal according to the agreed terms and conditions with the banking institution;
- Submit the advance application for Age 50 or Age 55 Conditional Withdrawal to the EPF based on the approved amount of personal financing by the banking institution.
EPF said participating banks include MBSB Bank and Bank Simpanan Nasional (BSN). It also said it would consider adding more participating banks for the scheme in the future.
What is the impact on members who make this advanced application?
After the advance application for Age 50 or Age 55 Conditional Withdrawal is approved by the EPF, the following will occur:
i) The amount and accumulated dividends will be paid to the banking institution when the member reaches the selected withdrawal age between 50-55 years old, as determined by the member; and
ii) Members can make other pre-retirement withdrawals subject to the balance of their Account 2 after deducting the amount of the Age 50 or Age 55 Conditional Withdrawal.
~ The End ~
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