KUALA LUMPUR (Aug 4): A government backbencher has urged the government to adopt a more flexible and choice-based approach in considering the introduction of a monthly pension payout under the Employees Provident Fund (EPF).
Datuk Mohd Shahar Abdullah (Barisan Nasional-Paya Besar) said the proposed monthly pension payout should not be made mandatory, especially since a monthly annuity option already exists within the current EPF framework.
Currently, accounts in EPF are divided into three types, comprising: Account 1 (only accessible upon retirement); Account 2 (can be withdrawn for selected pre-retirement purposes such as housing); and Account 3 (can be withdrawn at any time).
“If the proposal to introduce a monthly annuity is to be expanded or made the default option, it must be protected against the effects of inflation,” Mohd Shahar said during the debate on the 13th Malaysia Plan (13MP) in Parliament on Monday.
“This means the annuity or monthly pension payment structure must be reviewed regularly and adjusted in line with the rising cost of living,” he noted.
Mohd Shahar, who is also the chairman of the government backbenchers’ club and a former deputy finance minister, stressed that any new scheme under the EPF must provide meaningful long-term protection for contributors and respect individual choices rather than impose blanket policies.
In the 13MP report tabled last Thursday, the government said it is considering introducing a monthly pension payout mechanism under the EPF to complement the existing lump-sum withdrawal option, in an effort to provide retirees with a more stable income stream.
“This mechanism will allow for the separation of EPF contributions into two components — retirement savings and retirement pensions. 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 stated.
Deputy Finance Minister Lim Hui Ying reportedly said the proposed monthly pension payout under the EPF would apply only to new members once implemented.
Lim also clarified that the withdrawal rights of existing members will remain unchanged and that any transition to the new structure would be voluntary.
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