Increase in Flexible Age 55 Withdrawals in EPF

More members of the Employees Provident Fund (EPF) are opting for flexible withdrawals as they reach 55 years of age to better manage their retirement savings.

In a statement here Monday, the EPF said the Flexible Age 55 Withdrawal saw a significant increase in its take-up rate during the first quarter of 2009 (Q1 09).

"In Q1 09, a total of 9,731 applications were approved under Flexible Age 55 Withdrawals compared with 7,538 applications in the fourth quarter of 2008 (Q4 08).

"On year-on-year basis, it increased by 85.46 percent compared with 5,247 applications in the corresponding period last year," it said.

Total amount withdrawn under this withdrawal amounted to RM505.94 million (Q4 08: RM442.71 million) compared with RM341.85 million in Q1 08, it said.

Its chief executive officer, Datuk Azlan Zainol, said the growing popularity of Flexible Age 55 Withdrawals signified increased awareness among members that lump sum withdrawal would likely lead to income inadequate during retirement.

"Flexible Age 55 Withdrawal was introduced in November 2007 under 'Beyond Savings' initiative. It offers members the option to receive their EPF funds in instalments and on an ad hoc basis," he said.

Zainol said nevertheless, the Lump Sum Age 55 Withdrawal was still the more popular option for members reaching age 55.

In Q1 09, a total of 35,640 applications for Lump Sum Age 55 Withdrawal (Q4 08: 26,658) were approved, with total withdrawals of RM1.62 billion (Q4 08: RM1.15 billion).

"This compares with 29,744 applications approved in the Q1 08 with total withdrawals amounting to RM1.43 billion," he said.

Zainol said members continued to capitalise on the Educational Withdrawal, which allowed them to withdraw their savings in Account 2 for the purpose of paying their study fees or their children's, either local or overseas programme.

"In Q1 09, the Education Withdrawal recorded a total of 13,527 approved applications (Q4 08: 8,999), in which RM63.25 million (Q408: RM48.61 million) was disbursed.

"This compared with 11,530 applications approved in Q1 08 with total withdrawals amounting to RM56.87 million," he said.

He said the impact of the weaker economy was reflected in the drop in the number of applications for Housing Withdrawals in the quarter under review.

"Housing Withdrawals registered a total of 92,315 approved applications in Q1 09 compared with 112,624 applications in Q1 08.

"A total of RM1.12 billion (Q4 08: RM1.07 billion) was paid out under this withdrawal in Q1 09, a drop of 34.9 percent from RM1.72 billion in Q1 08," he said.

Zainol said in Q1 09, EPF membership base grew by 5.72 percent to 12.466 million members (Q4 08: 12.073 million) from 11,791,577 members a year ago.

The number of registered employers increased to 445,040 (Q4 08: 441,820) from 432,002 in Q1 08, he said.