SHAH ALAM (Feb 28): The proposed usage of Employees Provident Fund (EPF) Account 2 for payment of medical health insurance and takaful (MHIT) would not reduce the adequacy of retirement income, said its chief executive oficer Ahmad Zulqarnain Onn.
Responding to questions on suggestions to tap into EPF Account 2 for the government’s MHIT plans, Ahmad Zulqarnain said the level of retirement income adequacy is assessed solely based on Account 1 savings, which cannot be withdrawn until retirement.
“So using Account 2 will not detract or reduce [retirement income] adequacy because adequacy is only from Account 1,” he said during the EPF’s results briefing.
While the EPF is also awaiting details of the MHIT roll-out, Ahmad Zulqarnain said “it is beneficial” for its members to have adequate protection to ensure their ability to generate income is protected.
“Because it is with adequate protection and adequate healthcare…your ability to generate income is protected. You cannot generate income if you are sick.
“It is better for you to find protection while you are young, when it is cheap, so that you protect yourself and your family against adverse events and you are able to access quality medical care to allow you to go back to work. Because your ability to save for your retirement is not magical. It’s not automatic. It is dependent on your ability to work,” he added.
Under existing policy, 75% of EPF contributors’ savings are channelled into Account 1, followed by 15% to Account 2 or Sejahtera for medium-term needs like covering costs of approved illnesses and fertility treatments, education and housing. Account 3 is a flexible account which can be withdrawn at any time.
Beginning 2027, Malaysia would see a set of new MHIT plans targeting those without insurance coverage today, as well as those who are seeking more affordable alternatives to existing MHIT plans.
The plan, introduced on the heels of rising healthcare costs for patients and rising medical insurance premiums, is also set to introduce mechanisms with preference for healthcare providers that are aligned to best practices and are cost-efficient.
Finance Minister II Datuk Seri Amir Hamzah Azizan was previously quoted as saying that the ministry and the EPF were discussing whether insurance purchasers could tap their EPF savings.
The Galen Centre for Health and Social Policy, in opposing the proposal, said the EPF should not be “treated as a convenient funding tap for a healthcare financing experiment”.
“Allowing premium deductions from EPF savings may create a false sense of protection, while quietly worsening a retirement crisis that is already severe,” it said at the time.