Saturday 22 Jun 2024
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KUALA LUMPUR (July 11) The Employees Provident Fund has clarified that there is no change to the current lump sum withdrawals at age 55 and 60 for its existing members, and that the current EPF monthly withdrawal option only applies to members who voluntarily opt in.

The proposed mandatory monthly withdrawal option, meanwhile, will only apply to new EPF members born in or after 2010, and registered with the EPF after the implementation date.

“The first payout under the mandatory option is only expected to be made when these new members retire, some decades in the future. 

“This proposal is still being refined, and the EPF assures that any decision regarding the mandatory monthly withdrawal option will only be made with careful consideration and alignment with the EPF’s commitment to the best future interests of its members,” the EPF said in a statement on Tuesday.

At a virtual briefing on the same day, the EPF's chief strategy officer Nurhisham Hussein said the monthly withdrawal mechanism is in line with the EPF’s mandate as a pension fund for the country, as the lump sum withdrawal is not practical in the long run.

“The intention here is going back to our mandate because we are essentially a retirement fund and retirement savings is about covering your expenses in retirement. That lump sum (withdrawal) just doesn't make sense,” he said.

According to him, only a few retirement funds around the world still allow the full withdrawal of members' retirement savings and Malaysia is one of them. Thus, the mandatory monthly withdrawal mechanism will bring Malaysia in line with widespread global practice, as the country remains one of the very small minorities that continues to allow lump sum withdrawals and not a regular payout.

“As you can see from what we have gathered around the world, almost nobody allows for a lump sum withdrawal anymore unless they actually have a corresponding monthly payout. 

“So, since we don’t have a monthly payout in Malaysia, we decided to take this step in the absence of a national pension,” he added.
 

Edited ByTan Choe Choe
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