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HOW DOES THE ANNUITY SCHEME WORKS ?

The Annuity Scheme is for members to manage their post-retirement fund. You are eligible if you are not the public sector pensionable employees.

You can withdraw from your EPF Account I, II and III to purchase an annuity plan from insurance companies approved by the Ministry of Finance. This scheme provides you with a guaranteed regular pension income for life starting from the age of 55.

EPF is offering 2 types of annuity schemes

  • Conventional Annuity Scheme
  • Takaful Annuity Scheme

Both these schemes have two products.

The first product is known as deferred annuity. You can purchase the annuity policy before reaching the retirement age of 55 and receive the monthly income as soon as you reach 55. Under the Takaful Scheme, you will receive the monthly payments until 100 years of age.

The second product is known as immediate annuity. You can purchase the annuity policy between age 55 and 70. The monthly pension income will commence 1 month after the date of purchase. Under the Takaful Scheme, you will receive the monthly payments until the age of 100.

The premium rates for both products depend on your age and gender.

The annuity is purchased on a unit basis. 1 Unit provides a guaranteed minimum monthly income of RM100 per month for the rest of your life. However, there is no such guarantee under the Takaful Scheme.

You may purchase as many annuity units as you wish to meet your retirement needs and there are no requirements for medical examinations.

Payment of premium can be made to the insurance companies once every 3 months for the first product and one-off single premium applies for the second product.

In the event of death before the age of 55, the annuity policy holder's beneficiaries will receive the monthly payments for a guaranteed 10 years starting from the year the member dies. The policy will be null and void after the 10 years period.

Similarly under the Takaful Scheme, the beneficiaries will receive yearly annuity payments for 10 years.

In the event of death after the age of 55, the beneficiaries will receive the monthly payments for the balance of the guaranteed 10 years.

If a member dies after the age of 65, no annuity will be paid to the beneficiaries.

In the event of total and permanent disability, member will receive the monthly payments for life or until death occurs, and the beneficiaries will receive the payments for the balance of the guaranteed 10 years.

All applicants will be automatically accepted. You need to submit the KWSP 9G (AHL) Form and enclose the statement showing the number of annuity units you are eligible to purchase.

You will be given a "Cooling Off Period" of 15 days to cancel the policy without incurring any penalty. Thereafter should you decide to surrender the policy, a service charge is levied. The total premium and bonus minus the service charge will be returned to you.

The "Cooling Off Period" does not apply to the Takaful Scheme.

WHAT ARE THE CONDITIONS FOR WITHDRAWAL UNDER THE HOUSING WITHDRAWAL SCHEME ?

The Account II of 30% can be withdrawn for purchase or construction of a residential house or shophouse or to reduce the mortgage for the purchase.

Members can withdraw the difference between the price of the house and loan with and additional 10% of the price of the house or all the savings in Account II, whichever is lower.

(Cost of house - Loan amount) + 10% of cost of house

Members shall submit the KWSP 9C (AHL) Form together with supporting documents for withdrawal under this scheme.

The withdrawal for the purchase of a house must be within 2 years from the date of signing of the Sale and Purchase Agreement.

With effect from 2nd January 2001, no withdrawal is possible for the purchase of a second house unless the first house, which was funded via the EPF savings is being sold.

For the purchase of the second house subject to the above condition, member is required to submit documentation of the sale of property :

  • Title Deed under the name of member
  • Memorandum of Transfer (KTN 14A)
  • Deed of Assignment or
  • Loan Agreement cum Assignment

Members can continue to make further withdrawals once every 3 years from Account II to service the loan for the existing house if

  • the outstanding balance of loan used to buy a house or shophouse and the mortgage on house is the first mortgage
  • member has not reached the age of 55 years during approval of the application
  • the purchase of the second house or shophouse is before 2nd January 2001.

You cannot withdraw for house renovation or repair to your existing property or to collateral the house to acquire finance for the purpose of other than to purchase or build a house.

For withdrawal to service your housing loan, you can withdraw all your savings in Account II or the balance of your housing loan, whichever is lower.

Under joint application, both parties can withdraw all their savings in Account II or the balance of their housing loan, whichever is lower. Under this circumstance, EPF will process the application from buyer 1 and if the savings is insufficient, EPF will then process the application from buyer 2.



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