KUALA LUMPUR, Sept 25 \u2014 More Malaysians are proactively shoring up their retirement savings, preparing for longer-than-expected twilight years that could stretch well beyond 75.<\/p>\n
The Employees Provident Fund (EPF) said retirement readiness is improving in Malaysia, following a steady increase in voluntary contributions and contributions above the statutory rate.<\/p>\n
Currently, 42 per cent of EPF members aged between 51 and 55 have achieved the Basic Savings threshold by age \u2014 up from 36 per cent two years ago.<\/p>\n
Basic Savings refers to a pre-determined amount set according to age in the Retirement Account, ensuring members have at least RM240,000 by the age of 55.<\/p>\n
This allows retirees to withdraw RM1,000 monthly to cover basic retirement needs for 20 years \u2014 from age 55 to 75.<\/p>\n
However, under the new three-tier Retirement Income Adequacy (RIA) framework, EPF will gradually raise the Basic Savings threshold for members turning 60 from RM240,000 to:<\/p>\n
\u2022\u00a0\u00a0 \u00a0RM290,000 by January 1, 2026<\/p>\n
\u2022\u00a0\u00a0 \u00a0RM340,000 by January 1, 2027<\/p>\n
\u2022\u00a0\u00a0 \u00a0RM390,000 by January 1, 2028<\/p>\n
Based on EPF\u2019s calculations, a retiree with Basic Savings of RM390,000 will be able to withdraw RM1,625 in the first year of retirement, rising to RM4,434 by year 20.<\/p>\n
In the early years, however, this may fall short of the RM2,690 that a single elderly person is estimated to require each month to maintain a decent retirement life.<\/p>\n
Still, EPF is upbeat about the current trend in savings.<\/p>\n
For example, the average savings of members aged between 50 and 54 rose from RM265,788 in 2022 to RM308,644 in 2024 \u2014 above the Basic Savings threshold set for 2026.<\/p>\n
\u201cThis overall improvement has been driven by both policy enhancements and stronger contributions,\u201d EPF told Malay Mail in an email response.<\/p>\n
\u201cA significant step was the restructuring of EPF accounts in May 2024, which increased the allocation of contributions to the Retirement Account from 70 to 75 per cent.<\/p>\n
\u201cBy directing more savings into long-term funds, account restructuring provides members with a stronger foundation for life after retirement,\u201d it added.<\/p>\n
Voluntary contributions on the rise<\/p>\n
EPF\u2019s voluntary contribution schemes \u2014 i-Saraan and i-Suri \u2014 are now seen as viable long-term investments, increasingly popular even among those in the informal sector.<\/p>\n
Voluntary contributions rose by 62 per cent in 2024, while active membership expanded at a faster pace than the overall labour force.<\/p>\n
Similarly, members in the formal sector are also boosting their savings through the Voluntary Excess (VE) contribution programme, which allows employees or employers, or both, to contribute above the statutory rate.<\/p>\n
In the first half of 2025, 34,442 formal sector members contributed above the statutory rate \u2014 almost double the 19,591 members recorded in the same period last year.<\/p>\n
What about monthly pension-style payouts?<\/p>\n
When tabling the 13th Malaysia Plan in July, Prime Minister Datuk Seri Anwar Ibrahim proposed introducing monthly pension-style payments for new EPF members.<\/p>\n
Explaining the proposal, Deputy Finance Minister Lim Hui Ying said future contributions would be split into two components \u2014 a Flexible Savings account, which members can withdraw at any time, and an Income Savings account, which would be disbursed regularly or monthly until fully utilised.<\/p>\n
EPF said the proposal came about as rising life expectancy and Malaysia\u2019s ageing population posed challenges to retirement income adequacy.<\/p>\n
However, it clarified that there are no changes for now to its withdrawal or dividend distribution policies.<\/p>\n
\u201cFor EPF, any proposal will only be considered after detailed study and engagement to ensure it meets members\u2019 needs while maintaining the sustainability of the overall system,\u201d it added.<\/p>\n
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