KUALA LUMPUR, Sept 25 — More Malaysians are proactively shoring up their retirement savings, preparing for longer-than-expected twilight years that could stretch well beyond 75.

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.

Currently, 42 per cent of EPF members aged between 51 and 55 have achieved the Basic Savings threshold by age — up from 36 per cent two years ago.

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.

This allows retirees to withdraw RM1,000 monthly to cover basic retirement needs for 20 years — from age 55 to 75.

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:

•    RM290,000 by January 1, 2026

•    RM340,000 by January 1, 2027

•    RM390,000 by January 1, 2028

Based on EPF’s 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.

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.

Still, EPF is upbeat about the current trend in savings.

For example, the average savings of members aged between 50 and 54 rose from RM265,788 in 2022 to RM308,644 in 2024 — above the Basic Savings threshold set for 2026.

“This overall improvement has been driven by both policy enhancements and stronger contributions,” EPF told Malay Mail in an email response.

“A 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.

“By directing more savings into long-term funds, account restructuring provides members with a stronger foundation for life after retirement,” it added.

Voluntary contributions on the rise

EPF’s voluntary contribution schemes — i-Saraan and i-Suri — are now seen as viable long-term investments, increasingly popular even among those in the informal sector.

Voluntary contributions rose by 62 per cent in 2024, while active membership expanded at a faster pace than the overall labour force.

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.

In the first half of 2025, 34,442 formal sector members contributed above the statutory rate — almost double the 19,591 members recorded in the same period last year.

What about monthly pension-style payouts?

When tabling the 13th Malaysia Plan in July, Prime Minister Datuk Seri Anwar Ibrahim proposed introducing monthly pension-style payments for new EPF members.

Explaining the proposal, Deputy Finance Minister Lim Hui Ying said future contributions would be split into two components — 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.

EPF said the proposal came about as rising life expectancy and Malaysia’s ageing population posed challenges to retirement income adequacy.

However, it clarified that there are no changes for now to its withdrawal or dividend distribution policies.

“For EPF, any proposal will only be considered after detailed study and engagement to ensure it meets members’ needs while maintaining the sustainability of the overall system,” it added.