KUALA LUMPUR (July 31): The government is considering introducing a monthly pension payout under the Employees Provident Fund (EPF), in addition to the current lump-sum withdrawal option, to provide retirees with a more stable income stream.
Adequate retirement savings are crucial to ensure the well-being of workers in their old age. Therefore, a more effective mechanism will be explored to ensure a continuous source of income after retirement, according to the 13th Malaysia Plan report.
“This mechanism will allow for the separation of EPF contributions into two components — retirement savings and retirement pension. Through this effort, workers will be able to withdraw a portion of their savings while also receiving a monthly pension upon reaching retirement age,” the report added.
Currently, all EPF members’ funds that were contributed before 55 years old can be withdrawn in full upon that retirement age.
Accounts in EPF are divided into three types, namely the Retirement Account (Account 1), the Wellbeing Account (Account 2), and the Flexible Account (Account 3).
Account 1 is only accessible upon retirement. This is aimed at accumulating and growing members’ long-term savings to ensure a comfortable life after retirement.
Savings in Account 2 can be taken out for selected pre-retirement purposes, including to pay for housing, education, health, insurance/takaful protection, and hajj.
Funds in Account 3, introduced last year, can be withdrawn at any time, subject to looser terms and conditions. It is intended to meet members’ short-term financial needs, the EPF said previously.
The EPF, a retirement savings fund for private sector employees, offered higher dividend returns among government-linked investment institutions in recent years, with a 2024 payout of 6.3% for both conventional and Shariah.
Other government-linked funds include Permodalan Nasional Bhd (PNB), which operates Amanah Saham Bumiputera (ASB) and Amanah Saham Nasional (ASN), and pilgrim fund Lembaga Tabung Haji.
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