EPF: RM50,000 loans from Friday

(The Star) – Eligible Employees Provident Fund (EPF) members can apply for personal financing of up to RM50,000 from banks, starting from Friday.

Their savings in EPF will serve as collateral and they will only be charged with interest of between 4% and 5%, instead of the usual 8% to 15%.

If they are unable to pay off the loan by the time they are 55, the ir money in EPF will be used to payoff the loans.

However, the EPF Account 2 Support Facility comes with conditions. Only those above 40 and with at least RM3,000 in their Account 2 can apply under Phase 1.The EPF said Phase 1 will be open for a year, while Phase 2 for members under 40 will be announced later.

“Under Phase 1 of the facility, all Malaysian EPF members below 55 can submit an advance notice for ‘Age 50 or Age 55 Withdrawal’, provided they have a minimum of RM3,000 in their EPF Account 2.

“The repayment tenure is up to 10 years,” the EPF said in a statement yesterday.

The Finance Ministry had announced on March 2 that the facility was aimed at helping EPF members apply for personal loans from banking institutions.

“However, this withdrawal is conditional, where the withdrawal payment will only be made to the banking institution when the member reaches between 50 and 55 (years old), as stipulated in 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,” the EPF said.

It added that the personal financing application can be made online through participating banks.

“Before applying, members need to ensure their eligibility in EPF Account 2,” it said.

Participating banks include MBSB Bank and Bank Simpanan Nasional (BSN), with more banks possibly added in future.

The EPF said the facility is targeted at 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.

“It offers a practical solution for EPF members who are facing temporary liquidity issues by providing cash flow through personal financing, but with minimal impact to retirement savings.”

It also said 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, subject to the maximum tenure of up to 10 years.

“If the member opts for Age 55 Withdrawal, the EPF will pay the principal and accumulated dividend from Account 2 into the member’s financing account with the bank at age 55.

“The amount paid will be used to settle the remaining personal financing balance, before any excess is returned to the member.”

The EPF also said members’ savings would remain intact in EPF Account 2, and continue to receive annual EPF dividends, allowing members to take advantage of compounding their retirement nest egg while still addressing their short-term financial needs.

If a member fully settles their personal financing, they can notify the EPF to rescind their Advanced Notice for Age 50 or Age 55 Withdrawal.

Once the notice is rescinded, the amount applied for withdrawal (principal and accumulated dividend) in Account 2 can be utilised for other pre-retirement withdrawals from the EPF, it added.

Beginning tomorrow, EPF members can visit https://www.kwsp.gov.my/ms/fasiliti-sokongan-akaun-2 to check their eligibility and the amount they can apply for under the facility.

Additionally, frequently asked questions and corresponding answers related to the facility are also available on the website.

The EPF also called on members to register or update their mobile phone number via the self-service terminal available at any EPF branch for the purpose of receiving a Transaction Authorisation Code to verify their identity.

For more information, go to www.kwsp.gov.my or call the EPF Contact Management Centre at 03-8922 6000.