While the Employees Provident Fund (EPF) Account Three, or Akaun Fleksibel, offers flexibility to ease short-term financial pressures, repeated withdrawals could undermine long-term retirement savings, according to the Federation of Malaysian Consumers Associations (FOMCA).
FOMCA CEO Saravanan Thambirajah said many contributors understand that Account Three is designed for urgent needs, but frequent withdrawals reduce the compounding growth that is essential for retirement. “The word ‘flexibility’ can easily be interpreted as ‘it is safe to use’. However, every withdrawal reduces the amount that can continue compounding for retirement,” he noted, adding that EPF consistently urges members to use the account prudently.
Official data presented in Parliament show that as of June 30, 2025, roughly 4.63 million members had withdrawn RM14.79 billion from Account Three since its launch. Saravanan said the figures indicate that many Malaysians rely on the facility as part of short-term financial management, with most withdrawals made to cover debt repayment or daily expenses rather than discretionary spending. “The dominant driver is financial strain, not indulgence,” he said.
Saravanan emphasised that financial literacy campaigns alone may not be sufficient to curb withdrawals. “Real-world cost-of-living pressures could override financial education. High utilisation of Account Three withdrawals shows that education must be paired with clearer tools,” he added, suggesting that contributors be shown projections of how current withdrawals could reduce future retirement savings.
He advised that EPF funds, particularly those earmarked for retirement, should be treated as protected assets and accessed only as a last-resort safety valve rather than a supplementary spending account. Contributors should distinguish genuine needs from wants, explore alternatives such as tighter budgeting, and replace withdrawn funds when possible.
Lower-income earners, workers with irregular incomes, and young contributors are especially vulnerable, Saravanan noted, as smaller balances and misjudged compounding could significantly affect long-term outcomes. “With large-scale withdrawals already reported, financially fragile households could be reducing their retirement buffer early in their working lives,” he said.
He called on policymakers to complement financial education with targeted savings incentives, stronger wage policies, and enhanced social protection. “Flexibility could provide temporary relief, but structural solutions must come from policy intervention,” Saravanan stressed, highlighting the need for affordable microcredit, targeted subsidies, and emergency assistance schemes to reduce reliance on retirement savings.
“Retirement funds must remain a protected pillar of long-term security. Public policy should focus on reducing the circumstances that push people to draw down these savings early,” he concluded.
