The Employees Provident Fund (EPF) has said that it is looking at introducing a new saving and withdrawal mechanism for its members, which may involve the restructuring of their accounts. Additionally, it is also considering the option of aligning the withdrawal age of its members with their minimum retirement age.
Chief executive officer of the EPF, Datuk Seri Amir Hamzah Azizan said that these steps are being considered as the provident fund is looking for ways to help Malaysians save more efficiently for their retirement, as well as to adequately prepare Malaysia for an aging society. This comes as the EPF recognises that around 40% of Malaysia’s labour force – equivalent to about 6.1 million individuals – are not covered by formal retirement schemes, and that the country is expected to become an aged nation by 2044.
Even those who are covered by formal schemes do not necessarily have enough to last them through their whole retirement, said Datuk Seri Amir Hamzah. As an example, only 16.4% of EPF members between the age of 50 to 54 have achieved the basic savings threshold, with more than RM240,000 in savings. But even with this amount, they will only have a monthly budget of RM1,000 per month to live on in the coming 20 years.
Furthermore, the EPF noted that 73% of the total 3.6 million senior Malaysians (60 years old and above) – equivalent to about 2.6 million individuals – are not protected by any pension programmes at all. Only 3% of them are EPF members with more than RM240,000 in their accounts.
In highlighting this, however, Datuk Seri Amir Hamzah acknowledged that resolving the issue of Malaysians’ low retirement savings is not an easy matter, especially since it is subject to various factors that are beyond the EPF’s control. These include the country’s low wage structure; with 79% of its members earning a monthly salary of less than RM5,000, many of them have low EPF contribution, which translates to lesser funds for their retirement in the future.
Aside from that, other equally crucial aspects that will also impact an individual’s ability to retire comfortably in Malaysia include the country’s insurance policies and aged care services.
On the topic of Malaysia becoming an aged nation, Datuk Seri Amir Hamzah shared that the EPF is also looking at investing in aged care related infrastructures, such as professionally managed aged care centres. He stressed, though, that these investments are not meant to yield profit to be disbursed as dividend. Instead, they are to provide the EPF and its members with fair returns, to be reinvested to build better facilities. This is because even though the EPF’s main directive is to help its members obtain adequate retirement savings, it is also a major investor in the country’s infrastructure.
For starters, Datuk Seri Amir Hamzah said that the EPF will be investing and building an aged care centre at its previous headquarters in Petaling Jaya. “We are trying to create our first aged care centre there. We are trying to work with operators to get the facilities. As we get fair returns along the way, we build better facilities,” he stated.
(Source: The Edge Malaysia)
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