[UPDATED] EPF finalises Account 2 savings mechanism to facilitate personal loans

KUALA LUMPUR – The Employees’ Provident Fund (EPF) has released details on the mechanism as well as terms and conditions for its Account Support Facility 2 (FSA2) scheme, allowing account holders to obtain personal financing from banking institutions.

In a statement today, the EPF said the announcement stems from the Finance Ministry’s (MoF) statement regarding the same issue on March 21.

“The FSA2 scheme is a facility that aims to help EPF members obtain personal financing from a banking institution.

“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, based on existing withdrawals which is allowed under the EPF Act 1991.

“Anyway, the withdrawal is conditional whereby payments will only be made to banking institutions when members have reached the age of 50 to 55 years, as stipulated in the act.”

The EPF also stated that the banks involved will fully administer the application process for personal financing through this facility, subject to their financing assessment and credit framework.

“This personal financing application can be made online through participating banking institutions.

“Prior to applying, account holders would need to make an initial check of eligibility in their EPF Account 2.”

While it would consider adding more banks for the scheme in the future, the EPF said at present participating banks include MBSB Bank and Bank Simpanan Nasional.

At present, the FSA2 scheme involves two phases; the first, which commences on April 7, will remain open for one year and applicable to members aged 40 and above.

The starting date for the second phase, it said, which applies to those below 40, will be announced in the future.

From April 5, account holders may visit this website to check their eligibility and to find out the amount they can apply for 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, as per the scheme.

The scheme, the EPF said, allows eligible account holders a maximum financing amount fixed at RM50,000, subject to their respective 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%, which is lower than the current market rate of 8% to 15%.

“This facility is aimed towards account holders 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,” the EPF said.

Prime Minister Datuk Seri Anwar Ibrahim, who is also finance minister, had previously backed the proposal of utilising EPF savings as support for those seeking emergency loans, following repeated calls from the opposition and groups to allow further withdrawals. – The Vibes, April 3, 2023