KUALA LUMPUR: Prime Minister Datuk Seri Najib Razak has affirmed that Employees Provident Fund (EPF) members will be able to retain their rights to withdraw their savings at the age of 55, following public uproar over the retirement fund’s proposal to increase the full withdrawal age limit from 55 to 60.

“I want to assure the rakyat that EPF members will retain their right to withdraw (their savings) at the age of 55. The EPF will ensure that any new enhancements will only apply to new contributions if members decide to work beyond the age of 55,” he said in his keynote address at the opening of Invest Malaysia Kuala Lumpur 2015 yesterday.

“This strikes a fair balance between the rakyat’s expectations to their hand-earned money at the age of 55 and protecting them if they retire at the age of 60,” he added.

EPF had recently proposed four key areas of improvement and enhancements to current EPF schemes. Its proposals are subject to public consultation through its website for two weeks till May 5.

The first enhancement has two options. The first option is to align the full withdrawal age (60) with the minimum retirement age (55) as determined by the government. Under the second option, the EPF proposed to maintain the age of withdrawal at 55 and should members choose to continue working after that, new contributions will be placed in a new separate account which can be withdrawn at 60.

Najib also announced that the EPF has embarked on an initiative to offer a syariah-compliant investment option for its members by 2017, which will create the largest syariah fund of its kind in the world. It will also further strengthen Malaysia’s position as a leading Islamic financial centre.

“As such, Malaysia is well placed to drive the sustainability agenda further and in Budget 2014, I announced initiatives to do just that,” he said.

Najib did not specify how big the syariah-compliant fund would be.

Najib also noted that Malaysia’s capital market has witnessed strong growth and currently stands at RM2.82 trillion with the equity market at RM1.74 trillion and the bond market at RM1.08 trillion.

He added that the scale of capital market-based financing has also deepened significantly within an annual average of RM111 billion raised through corporate bonds and initial public offerings over the last three years.

“Growth in the fund management industry has been an important driver of the capital market deepening, with RM630 billion under management as at the end of 2014. Malaysia also has a well-developed Islamic fund management industry, holding 22% of the US$73 billion Islamic assets under management globally in 2014,” he said.

Najib added that in order to make the most of this opportunity and firmly establish Malaysia as a global leader in this field, the Securities Commission Malaysia is developing a comprehensive blueprint for Malaysia’s Islamic fund and wealth management industry which will be ready by the end of this year.

“The blueprint will chart the medium- and long-term strategic direction for the industry as well as map out strategies and recommendations to strengthen the country’s competitive edge,” he said.

In a statement yesterday, the EPF said it acknowledged the preference for the second option which preserves flexibility and protects the contributions of members post 55 years old.

“This is definitely in line with our preliminary findings of the members’ consultation survey which overwhelmingly indicated support for Option Two under our proposal,” said EPF chief executive officer Datuk Shahril Ridza Ridzuan.

This article first appeared in The Edge Financial Daily, on April 24, 2015.