The Employees Provident Fund (EPF) has begun accepting applications for the Akaun 2 Support Facility since last Friday (7 April 2023), meant to assist individuals who are still struggling with their finances due to Covid-19 and other recent calamities. Its implementation will be carried out in two phases, with Phase 1 starting first for eligible members aged 40 years and above (but not yet 55 years old). Phase 2, meanwhile, will be announced at a later date for members aged 40 years and below.

Here are several key things that you should know about the new Akaun 2 Support Facility, based on the FAQ that has been released by the EPF.

Under this facility, members can apply for an advance notice for Age 50 or Age 55 Conditional Withdrawal, which then serves as a support for them to obtain a personal financing or loan of between RM3,000 to RM50,000 from participating banks. With this, the member’s Akaun 2 savings may be used to help repay the loan taken out when he or she reaches the age of between 50 to 55 (as chosen by the member).

The EPF further stated that it will only disburse the principal and accumulated dividend from the member’s Akaun 2 into their financing account with the bank at the stated aged. In the meantime, members are still required to make monthly repayments of a certain amount to the bank (as set in the financing agreement). If a member is able to fully settle their personal financing at an earlier date on their own, they can then contact the EPF to rescind their advance notice of Age 50 or Age 55 Withdrawal. This way, the amount applied for withdrawal can be utilised for other pre-retirement withdrawals instead.

The Finance Ministry has also clarified that the Akaun 2 Support Facility is not a form of collateral offered by a borrower to a bank.

Deputy Finance Minister I, Datuk Seri Ahmad Maslan explained: “A collateral means (a bank) has the right to enforce the collateral when a borrower fails (to repay the loan), meaning if the borrower takes a RM5,000 loan and fails to repay it, (the bank) takes the RM5,000 immediately. But this Akaun 2 Support Facility is not a collateral. The lender, that is the bank, cannot use the EPF savings if the member fails to pay his loan instalments. Members still have the right to make withdrawals when they reach the age of 50 or 55 (subject to the balance in their accounts) because they are still protected under Section 51 of the EPF Act 1991.”

This facility is only open to EPF members who are aged 55 and below, with its implementation to be carried out in two phases:

You must also have a minimum balance of RM3,000 in your Akaun 2 if you wish to apply. Additionally, bankrupt individuals may apply for the personal financing provided under this facility, but approval is subject to the participating bank’s terms and conditions.

The eligible amount for your personal financing (through the Age 50 or Age 55 Conditional Withdrawal) will be based on the existing balance that you have in your Akaun 2, minus any pre-retirement withdrawals that have not been approved (if any).

Here is a table from the EPF for better clarification:

Note, however, that ultimately, the final and actual amount of personal financing that you can borrow will be determined and approved by the participating banks.

The loans offered under this facility will have an interest rate of between 4% to 5% – considerably lower than the market rate of 8% to 15%. The actual rate will be determined by the banks, and is primarily dependent on the Standardised Base Rate (SBR) at the time.

You can opt for a repayment period of up to 10 years.

Applications can be done fully online, via the participating bank’s online banking portals. Before you proceed with your application, though, you should first make an initial check of eligibility through the EPF i-Akaun portal to see if your EPF Akaun 2 balance is sufficient. Make sure to also update your contact details via the self-service terminals (SST) at any EPF branches so that you can receive any transaction authorisation codes (TAC) required for verification when conducting transactions.

Once that’s done, visit your preferred bank’s online banking portal and apply for the personal financing provided under the Akaun 2 Support Facility. After your personal financing application is approved, submit another application for the advance notice for Age 50 or Age 55 Conditional Withdrawal to the EPF – also through the bank’s portal. This application must be based on the amount of personal financing that has been approved by the bank.

Members will then receive notification regarding their application status for the advance notice of their Age 50 or Age 55 Conditional Withdrawal via their i-Akaun inbox.

At present, only two banks are involved in providing personal financing under the Akaun 2 Support Facility: MBSB Bank and Bank Simpanan Nasional (BSN).

MBSB Bank’s personal financing for this facility is called Ihsan-i, and is already open for application (you can find out more about it on the bank’s website here). It will continue accepting applications until 14 April 2024.

Meanwhile, BSN will only begin accepting applications for its personal financing under the Akaun 2 Support Facility starting from 15 April 2023. Terms and conditions will be announced later.

The Akaun 2 Support Facility will be made available for only one year. This is to avoid complete dependence on EPF savings to pay and settle debts.

Note that each member is only allowed to make one application for the Akaun 2 Support Facility, and once the application has been approved, it cannot be cancelled.

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In announcing the Akaun 2 Support Facility, Prime Minister Datuk Seri Anwar Ibrahim explained that the facility is a compromise offered by the government as it is just not advisable to allow another round of special EPF withdrawals. This is as many contributors already have insufficient EPF savings for their retirement as of today, with certain segments of the society already seeing a significant dip in the median savings of their EPF accounts.

Datuk Seri Anwar also stressed that only individuals who are truly in need of additional financial aid should tap into the Akaun 2 Support Facility. Additionally, members may seek advice from the EPF’s Retirement Advisory Service (RAS) personnel, officers from the Credit Counselling and Debt Management Agency (AKPK), or bank officers as they make their decision.