Flexible EPF withdrawal for pricier houses

The Employees Provident Fund (EPF) has launched a flexible withdrawal scheme for higher-end houses, which will be effective from Sunday.

In a statement released yesterday in Kuala Lumpur, the EPF said the scheme is open to contributors who have not made withdrawals under the existing scheme to purchase a house or reduce their housing loans.

The main difference of the new scheme is that it is designed to give qualifying members, who initially were not eligible for a higher loan, a better chance to boost their home loan eligibility with the banks after they get to view the members' current and future EPF savings potential.

Those who have made housing withdrawals or who are above 54 years of age are not eligible for the new scheme.

EPF chief executive officer Tan Sri Azlan Zainol said the new scheme does not affect a member's retirement funds as savings that have been set aside under this facility will continue to earn the yearly dividends paid by the EPF.

Members must be below 54 years of age on application day and the application must be made together with their application for EPF withdrawal to purchase/build a house or reduce their housing loans.

A member may transfer part of his savings in account two to the flexible housing withdrawal account, followed by a monthly transfer of a specified amount or contribution to this account.

The flexible housing withdrawal account is not a newly set-up account but a template within account two, created for administrative purposes.

The minimum amount for the housing loan will be determined by the initial two participating banks, namely Malayan Banking Bhd and Public Bank Bhd.

Savings which have been set aside under the flexible housing withdrawal cannot be withdrawn or utilised for any other pre-retirement withdrawals such as housing, education or medical.

Members, however, can still use the remaining savings in account two for other pre-retirement withdrawals.

Each application is to be submitted by the member to the financial institution from where he will obtain the housing loan.

All application forms will then be submitted to the EPF by the headquarters of each participating financial institution.

Members who wish to cancel their flexible housing withdrawal term may do so, but only after a year from the commencement date of the facility and upon consent from the participating bank. - Business Times