In a statement, EPF said the savings in Account 2 will serve as the basis for obtaining personal financing through an advance application for the “Age 50 or Age 55 Conditional Withdrawal” scheme.
It said the payment for the conditional withdrawal will only be made to the relevant bank when the EPF member reaches the age of 50 to 55, as set out under 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,” it said.
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.
The scheme will involve two phases, with the first beginning on April 7 and will remain open for one year, applicable for members aged 40 and above.
The starting date for Phase 2, for those below 40, will be announced in the future.
Eligibility
EPF said that before applying for the personal loan, members must ensure their eligibility for Account 2. They can then submit their loan application online to the participating bank according to the financial institution’s terms and conditions.
Once approved, members can submit an initial application for the Age 50 or Age 55 Conditional Withdrawal to EPF based on the approved financing amount.
From April 5, members may visit https://fsa2.kwsp.gov.my to check their eligibility and to find out the amount they can apply for under the scheme.
Under the scheme, members below the age of 55 can submit an advance notice for the withdrawal, provided that they have at least RM3,000 of savings in their Account 2.
The maximum financing amount has been fixed at RM50,000, subject to the member’s Account 2 balance, with a repayment period not exceeding 10 years.
The interest rate (conventional) or profit rate (Islamic) will range from 4% to 5%, lower than the current market rate of 8% to 15%.
“This 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,” EPF said.
Disbursement
If a member makes an advance notice for age 50 withdrawal, 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.
If the member opts for age 55 withdrawal, EPF will pay the principal and accumulated dividend from Account 2 into the member’s financing account with the bank at age 55.
EPF said the amount paid will first be used to settle the remaining personal financing balance, if any, before returning any excess to the member.
Settlement
If a member fully settles their personal financing, they may notify EPF to rescind their advance notice of age 50 or age 55 withdrawal.
Once the notice is rescinded, the amount applied for withdrawal in Account 2 can be utilised for other pre-retirement withdrawals from EPF.
EPF’s statement follows the finance ministry’s clarification that EPF savings can be used to support loan applications.
Previously, Prime Minister Anwar Ibrahim proposed using EPF savings as collateral for those seeking emergency loans, following repeated calls from the opposition and other groups to allow further withdrawals.