At the end of the day, after reading through everything, I think this is a fair implementation.

1. There is no change to the dividend for Account 3.
2. Opt-in mechanism for existing EPF balances. Those who don’t need the money in Account 3, do not need to opt-in.
3. Apportionment into EPF is from May 2024 onwards is revised from 70:30 to 75:15:10. With this change, there is more money locked-in (75% vs 70% before), but greater flexibility to do withdrawals at any point in time should the need arise.
4. For long-term holders, no underlying change at all. Only difference is, we can now withdraw 10% of our future contributions at any time without penalty.
5. The fact that we can withdraw 10% of future contributions at any time might pose an issue to some people with impulse control issues. This is my only gripe with this change.
6. This might enable EPF to offer slightly more “optimized” returns, at least for Conventional fund as there will be less “lazy capital”.
7. For Shariah fund, not sure how EPF will deal with this issue as the B40 and M40 most prone to withdrawal are likely to come from here. As the Shariah fund is smaller, it might be adversely impacted by liquidity constraints. Hopefully, liquidity will not be generated at the expense of Conventional fund.

Use your logic, what will cause them to declare less dividend?

The Account 3 cannot be gamed. We can’t just pump in money for short term, and then withdraw. Cause, the apportionment is fixed at 75:15:10.

Given that, I find it hard to understand why people expect lower dividend for Account 3.

If anything, if EPF loses 5% of annual dividend declared each year (half of the 10% from Account 3), it would be a lower base and hence higher dividend the following year for those who did not withdraw. This is as long as the withdrawals do not cause liquidity issues, which I don’t think they will given EPF’s asset allocation to cash/money market which is sufficient to absorb this.

Also don't forget, Account 1 allocation has increased from 70% to 75%. This money remains locked till retirement.