Kuala Lumpur — A proposal to allow Malaysians to withdraw their annual Employees Provident Fund (EPF) dividends before retirement has sparked debate over whether short-term financial relief outweighs long-term retirement security.
Datuk Seri Shahidan Kassim, a Perikatan Nasional MP representing Arau, raised the proposal in the Dewan Rakyat on February 25, calling for "100% of the dividends to be channeled into Account 3" — the flexible account that allows withdrawals before retirement age.
The timing, Shahidan argued, would benefit workers during the Hari Raya festive season. He cited a personal example: "One of my officers has RM300,000 in savings but he cannot withdraw any of it as he is too young." He estimated the officer's dividend would be approximately RM10,000, which could be accessed if placed in the flexible account.
EPF is Malaysia's national pension fund, mandatory for private-sector workers, currently managing RM1.1 trillion in retirement savings for 15 million members. The fund typically announces annual dividend rates at the end of February — this year on February 28.
Under the current structure, EPF savings are divided into three accounts: Account 1 (retirement, accessible at 55), Account 2 (housing and education), and Account 3 (flexible withdrawals). Dividends are currently distributed proportionally across all accounts based on balance.
Shahidan's proposal would redirect all dividends to Account 3, making them immediately accessible for any purpose.
The proposal echoes pandemic-era withdrawal schemes that allowed Malaysians to tap EPF savings to survive COVID-19 lockdowns. Between 2020 and 2022, the government approved multiple rounds of early withdrawals totaling RM145 billion — roughly 13% of the fund's assets at the time.
Those withdrawals provided immediate relief but left many Malaysians with depleted retirement savings. EPF data shows that 6.8 million members — nearly half the total — now have less than RM10,000 saved, well below the estimated RM240,000 needed for a basic retirement.
The contrast with Singapore is stark. The city-state's Central Provident Fund (CPF) imposes stricter withdrawal limits, protecting retirement balances while allowing limited access for housing and healthcare. Singaporeans routinely save 20% of salary in CPF with employer matching, compared to Malaysia's 11% employee contribution plus 12-13% employer share.
Singapore's approach prioritizes retirement adequacy over flexibility. Malaysia's pandemic withdrawals prioritized immediate relief, but at the cost of long-term security.
EPF has not commented on Shahidan's proposal. Any change would require government approval and amendments to EPF regulations.
For Malaysia's 15 million EPF members, the question is whether accessing RM10,000 today is worth retiring with RM10,000 less tomorrow. Ten countries, 700 million people, one region — and in Malaysia, the debate over how to balance today's needs against tomorrow's security is back.
