Cant stop scratching your head when it comes to retirement concerns? We recently caught up with Wong Theen Chuan, Deputy Manager (Strategic Planning) of the Employees Provident Fund (EPF) for his top tips on how you can get more out of your EPF.
1. Cash Your Savings for Urgent Needs Only
A quick background on the EPF: it comprises Account 1 and Account 2. Seventy percent of your monthly contributions go to Account 1, which is purely for retirement purposes and remains untouchable until the age of 55, Wong says. But the remaining 30% goes to your Account 2 thats eligible for pre-retirement withdrawals for a handful of purposes such as housing, medical, education, and even the Hajj for Muslims.
Theres a caveat to the concept of pre-retirement withdrawals. We believe that certain purchases can actually add value to your life after retirement, Wong says. For example, if you own your own home, youll be able to retire more comfortably, and if you further your education, hopefully thatll give you the means to improve your salary and to encourage you to save more too.
Need an extra fun fact to help you sleep more soundly at night? Your EPF savings are protected from creditors in case of bankruptcy under Section 51 of the Employees Provident Fund Act 1991.
2. Dont Withdraw Everything at One Go
According to Wong, most individuals choose to make a lump-sum withdrawal of their EPF savings upon reaching the age of 55; but its worth keeping in mind that there are other means of payment for you to select from.
You can actually choose to get your savings either monthly; partial; monthly and partial; or through just annual dividends. If you opt for flexible withdrawals, youll still be able to stretch you retirement savings while further capitalising on your annual dividends, Wong adds. Take for example the Akaun Emas scheme that was introduced in January 2017: Under the Akaun Emas initiative, all new contributions that are received after the age of 55 will be placed in the Akaun Emas itself, and can only be withdrawn when you reach the age of 60, Wong explains. Its just an extra measure weve implemented to ensure that your retirement savings at 60 are in line with the minimum retirement age age for employees in the private sector.
He highlights that the duration for dividend payment has been extended from the age of 75 onwards. As long as the money is in EPF, youll receive dividend payments up to the age of 100.
3. Sign up for the i-Akaun
Heres an easy way to monitor your EPF transactions: register for the i-Akaun. Its an online tool that allows you to log-in and to check your account, Wong explains, likening it to internet banking services such as Maybank2u. You can check your balance and perform a couple of simple transactions online too.
In addition to letting you monitor your monthly contributions, youll also be alerted when your annual dividend payment is in. Signing up for the i-Akaun is simple too. You can register by requesting for your activation code at any EPF kiosk or calling the EPF Claim Status CMC [Contact Management Centre], Wong says. Just be sure to have your IC with you.
4. Say Yasss to RAS
Not sure where to start when it comes to planning for your retirement? Take advantage of the EPFs Retirement Advisory Service (RAS). Its a platform that offers members personalised, free-of-charge advice from EPFs trained officers regarding their financial and retirement planning, Wong says.
RAS can help you achieve your retirement goals, and he explains how using the following scenario: Lets say you plan to have RM2 million in your account when you retire at the age of 55. The RAS officer can give you advice on how much you should be saving every month and every year to achieve your target.