KUALA LUMPUR: Employees Provident Fund members should think long term instead of withdrawing their dividends, said Federation of Malaysian Consumers Associations (Fomca) vice-president Datuk Indrani Thuraisingham.

She said members should focus on financial prudence, long-term security and policy safeguards.

She said although the ability to withdraw dividends from Account 3 provides short-term relief, it may reduce long-term retirement savings.

"With longer life expectancy and rising healthcare costs, withdrawing savings early could lead to financial struggles in old age.

"If necessary, prioritise essential expenses like medical needs, debt repayment (especially high-interest loans) and emergency situations.

"Avoid spending it on discretionary spending or non-essential purchases," she said when contacted.

She advised contributors who withdraw funds to reinvest in secure instruments, such as fixed deposits or low-risk funds, to maintain long-term financial security.

"Instead of relying on EPF withdrawals, consumers should focus on sustainable financial planning, including building emergency funds and reducing unnecessary spending."

Indrani said policymakers should ensure that contributors do not excessively deplete their savings through Account 3 withdrawals.

"The government and EPF should strengthen financial education to help contributors make informed decisions about withdrawals and savings.

"Setting responsible caps and ensuring targeted withdrawals for expenses can help prevent misuse.

"While Account 3 withdrawal options can help in emergencies, consumers and policymakers must ensure they do not become a long-term financial trap."

She added that with the rising cost of living, incentivising higher voluntary contributions can help members rebuild their retirement savings after withdrawals.

EPF today announced a 6.3 per cent dividend rate for conventional and syariah savings, with a total payout of RM73.24 billion.

For the financial year ending Dec 31, 2024, EPF recorded a total investment income of RM74.46 billion, 11 per cent higher than 2023's RM66.99 billion.

This is the highest dividend rate since 2017.