KUALA LUMPUR (Oct 8): Malaysia is still considering reforms for Employees Provident Fund (EPF) contributors who have reached the minimum retirement age, the Dewan Rakyat was told on Wednesday.

While the current policy remains unchanged, allowing members to withdraw their savings in full, partially, or in scheduled payments, reforms are necessary to ensure more sustainable income post-retirement, said Deputy Finance Minister Lim Hui Ying.

“We are reviewing a new account structure to be introduced upon reaching the minimum retirement age,” she said, noting that the proposed structure would apply to new members once implemented while existing members could opt in voluntarily.

The proposal comes as the majority of Malaysians are still struggling to build enough reserves for retirement while more than 42% of senior citizens in the country currently live in relative poverty.

Fewer than one in four EPF members have accumulated enough savings to meet the fund’s basic threshold for retirement adequacy. Further, Malaysia’s population is also rapidly ageing, underscoring the urgency of building a more resilient retirement system.

EPF data as at Aug 31 showed that only 23.9% of EPF members aged 18 to 55 had achieved the basic savings level according to their age threshold largely due to the fact that nearly half of the members are inactive contributors, Lim told Jimmy Puah Wee Tse (Pakatan Harapan-Tebrau) in Parliament.

As one of the world’s largest pension funds, the EPF had 16.5 million members with total savings of RM1.31 trillion at the end of August. The EPF defines basic savings as the minimum amount members should have at various ages to achieve a target of RM240,000 by age 55, which provides an estimated monthly income of RM1,000 over 20 years after retirement.

Malaysians face structural challenges such as low wages, early withdrawal eligibility at age 55 that does not align with Malaysia’s life expectancy, inconsistent contribution patterns, and low levels of financial literacy among the population, she noted.

“These statistics highlight the need to strengthen the EPF’s structure to make it more sustainable and responsive to ageing population challenges,” she said.

The system being studied would comprise two main components, which are flexible savings, which can be withdrawn anytime based on members’ needs, and retirement income savings, to be paid out periodically or monthly until depleted.

“This proposal is still being studied and will only be finalised after comprehensive stakeholder engagement and due consideration of members’ long-term interests,” Lim added.

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