This article first appeared in The Edge Malaysia Weekly on March 2, 2026 - March 8, 2026

Perhaps eager for brownie points, an opposition member of parliament last Wednesday (Feb 25) called for the Employees Provident Fund’s (EPF) 2025 dividends, being declared on Feb 28, to be channelled into the Flexible Account 3, claiming that it would be helpful to the people for the upcoming Hari Raya festivities.

Providing an example, he said one of his officers, with RM300,000 in savings, would stand to get close to RM10,000 in dividends — money that would be helpful if he was able to withdraw it.

The math in his example, however, is erroneous in more ways than one.

First, an annual dividend of “close to RM10,000” would imply EPF savings of RM160,000 to RM200,000 and not RM300,000 as he mentioned.

Second, every ringgit spent before retirement takes away savings that could be left to compound into a larger pool upon retirement. Withdrawing RM10,000 today would be cheating oneself of between RM40,000 and RM60,000 in retirement savings in 30 years, especially if annual EPF dividends are closer to 6% than 5%.

Third, for better or worse, Malaysia has already introduced EPF Flexible Account 3 to which 10% of statutory contributions has been going since May 11, 2024.

If his young staff member had had RM200,000 in mid-2024 — 70% or RM140,000 in Retirement Account 1 and 30% or RM60,000 in Wellbeing Account 2 — he would have seen RM20,000 transferred into Account 3 for any­time withdrawals, if he opted to transfer the qualifying balance from Account 2. If he had already used that RM20,000 in the past two years, it is high time the young man started to save for the future.

While populist calls may well be made with good intentions, they do not absolve potential negative impacts that are ultimately borne by individuals. Faced with an ageing society that requires a wider social safety net, Malaysia needs more future-proofing policies, not short-term populism.

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