KUALA LUMPUR, April 10 (Bernama) — The Employees Provident Fund (EPF) is considering to realign its members’ withdrawal age for retirement savings closer towards the retirement age at 60, said chief executive officer, Datuk Shahril Ridza Ridzuan.
He said the country had to address the issue of withdrawal at 55 versus the new retirement age at 60, otherwise it would be a burden to the society to manage people who are retiring without enough money in their accounts.
Shahril cited independent research conducted by economists as well as EPF’s internal research that showed the average people tend to exhaust their retirement savings within three to five years after making full withdrawal.
“Roughly about 70 per cent of people who withdraw their retirement savings in full will essentially deplete the money within three to five years time.
“Malaysians now make the withdrawal first (at 55) before actually retiring (at 60), and we are looking at this issue for the right policy response,” Shahril told a media briefing here Friday in conjunction with the release of the pension fund’s 2014 Annual Report.
He said while the EPF recommended an amount of at least RM196,800 upon retirement, statistics showed that only 22 per cent of active 54-year-old contributors met this minimum last year.
Even more alarming, 68 per cent of all EPF members of the same age had less than RM50,000 in their accounts, he said.
Information from the EPF’s report showed that the basic savings is set at RM196,800 to give a monthly income of RM820 for 20 years until age 75.
It also stated that based on the retirement age for Malaysians of 60 years, and the life expectancy of 72.6 years for men and 77.2 years for women, the total savings (RM196,800) would require a retiree to survive on just RM700 a month for the rest of his or her life.
This is even less than the poverty threshold of RM830 per month in 2012 as declared by the Statistics Department.
“It is important to start planning for retirement as early as possible because acquiring the savings habit requires discipline and adequate time.
“The longer one saves, the more one accumulates in one’s retirement cache,” the report said.
A good plan ensures that a desired lifestyle is possible at retirement supported by sufficient income, but currently, the only significant form of savings for most Malaysians is the amount they accumulate in the EPF.
The EPF said it had a pilot project aimed at increasing knowledge on basic financial and retirement planning by offering a retirement advisory service at its two branches in Kuala Lumpur and Petaling Jaya.