What is the EPF/KWSP?
The Employees Provident Fund Act 1991 (Act 452) provides retirement benefits for members of the EPF through management of their savings contributions. The EPF (also called the KWSP) is a social security institution which administers their members retirement fund using a defined contribution plan. This is different from a government pension which is a defined benefit retirement plan.
Your EPF Account is where all your monthly contributions and that from your employer are credited into.
Effective 1 January 2007, the Account was divided into two parts, namely Account I and Account II.
Contributions received on your behalf from your employer will be credited into the two accounts according to the following percentages:
Account I – 70% of monthly contribution
Account II – 30% of monthly contribution
These accounts are created for different purposes, and different types of withdrawals are applicable on each account:
Account I
Savings in this account is meant to be used for your retirement, and it cannot be fully withdrawn before you reach the age of 55, become incapacitated, leave the country or deceased (payment will be made out to your nominee / heir).
When you attain the age of 55, you may choose to either withdraw the full amount in a lump sum (including any balance in Account 2), a partial amount larger than RM2,000, or withdrawal into a monthly payment scheme to stagger your payments.
You are allowed to invest part of the balance in Account 1 in your own investments at your own risk at any time in your life. This part is 20% of the excess between your Account 1 balance and a predetermined Basic Savings Level based on your current age.
For example, if the Basic Savings Level for a 30 year old is set at RM18,000, this means that you may withdraw 20% of the difference between your current Account 1 balance and RM18,000.
If you had RM50,000 in your Account 1 balance, this would mean you can withdraw RM6,400 (this is 20% x [RM50,000-RM18,000]) to be invested in funds managed by Approved Fund Management Institutes.
Account II
Savings in this Account is meant to help you to make early preparations for a comfortable retirement. Full/partial withdrawals are allowed prior to the age of 55 for the purposes of:
Attaining the age of 50 years;
Owning a house – the down payment for your first house;
Settling the balance of your housing loan – first house;
Financing education for you and that of your children’s;
Medical expenses for you and that of your children’s.
source:::https://my.news.yahoo.com
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