ONLY a minority of Malaysians in the formal workforce are projected to accumulate enough savings to enjoy a comfortable retirement, according to the latest data released by the Employees Provident Fund.
The EPF revealed that merely 10.2 per cent of its contributors are expected to reach RM1.3 million by the age of 60, a sum considered “enhanced savings” under its Retirement Income Adequacy (RIA) framework, sufficient to support a comfortable lifestyle in retirement.
The figures are more alarming for those already approaching retirement. Among contributors aged 56 to 60, only around 5 per cent are likely to achieve the RM1.3 million benchmark.
The data also show that 39.5 per cent of contributors could attain the newly revised “basic savings” level of RM390,000 by 60, a sum intended to cover essential living expenses.
This benchmark was raised from RM240,000 in 2024 to reflect rising costs of living and updated retirement needs.
Among contributors in the 56–60 age bracket, roughly 21.5 per cent have reached or exceeded the basic savings threshold.
Approximately 28 per cent of contributors overall are projected to accumulate RM650,000 by retirement, considered “adequate savings” that allow for a reasonable standard of living.
Sunway University economics professor Dr Yeah Kim Leng described the statistics as concerning, particularly for older workers yet to reach the RM390,000 threshold.
“Closer monitoring and more granular socio-economic data are needed to determine the appropriate intervention policies and strategies,” he said.
However, Dr Yeah noted that a notable portion of those approaching retirement have savings within or above the adequate range.
About 13.3 per cent of contributors aged 56–60 have RM650,000, while 5.2 per cent are projected to reach RM1.3 million, indicating that roughly 18.5 per cent of this age group have sufficient savings for a reasonable or comfortable retirement.
He emphasised that EPF balances alone may not fully reflect a retiree’s financial position, as many may possess other assets such as property, investments, or financial support from family members.
“The potential aged poverty issue might not be as dire given that their EPF contributions may not be the sole source of retirement savings,” Dr Yeah told The Star.
He also suggested that Malaysia consider gradually raising the retirement age from 60 to 65, mirroring approaches in other countries grappling with insufficient retirement savings and increasing life expectancy.
“The gradual increase in the mandatory retirement age is a core strategy response, as evident in most countries facing inadequate retirement savings or unsustainable pension liabilities, in addition to longer life expectancy,” he said.
Dr Yeah further recommended targeted incentives and innovative programmes to encourage higher savings, including customised financial literacy initiatives and measures to boost incomes.
He attributed the low retirement savings among older workers to factors such as prior withdrawals, rising costs of living, uneven income growth, larger family responsibilities, and the financial demands of urban lifestyles.
Bank Muamalat Malaysia Bhd Chief Economist Dr Mohd Afzanizam Abdul Rashid noted that the data highlighted wealth inequality among EPF contributors.
“EPF has played its role to ensure its dividend rate is commercially competitive. Efforts to garner more contributions have been effective and showing good traction.
“Other policies must come in that will help provide the right ecosystem for workers’ income to grow so that they could contribute to EPF and accumulate sufficient funds when they retire,” he said.
Afzanizam added that slower income growth coupled with rising living costs has constrained the ability of many Malaysians to save, and that retirement security policies must be integrated with broader initiatives across education, healthcare, and infrastructure.
Under the EPF’s Retirement Income Adequacy framework, members are encouraged to target three retirement benchmarks.
Basic savings of RM390,000 is intended to cover essential needs, adequate savings of RM650,000 supports a reasonable standard of living, and enhanced savings of RM1.3 million allows for a comfortable retirement.
The framework assumes a 20-year withdrawal period, aligning with average life expectancy in Malaysia. Retirees with basic savings could withdraw RM1,625 per month initially, rising to RM4,434 by the twentieth year.
Those with adequate savings could draw RM2,708 per month at first, increasing to RM7,389 by year twenty. Retirees with enhanced savings could withdraw RM5,417 in the first year and up to RM14,779 in the twentieth year, supporting a far more comfortable lifestyle.
According to EPF’s Belanjawanku 2024/2025 guide, a single elderly Malaysian requires roughly RM2,690 per month to maintain a reasonable standard of living during retirement.
With 10.6 million active members, the EPF framework is designed to help contributors set realistic savings targets and ensure that their EPF funds can serve as a sustainable source of retirement income. – March 15, 2026