With savings falling short of RM10,000, members may face a monthly retirement income below RM42 for 20 years, warns the Ministry of Finance (MOF).
Typically reserved for emergencies, savings become a vital resource for future living expenses, particularly during retirement. Many individuals opt for the Employees Provident Fund (EPF) as their primary retirement savings avenue.
6.3 Million Members Struggle with Savings Below RM10,000
However, the challenge of insufficient EPF savings intensifies, with 6.3 million members below 55, comprising 48%, having savings below RM10,000 as of September 30, 2022.
This predicament could result in a monthly retirement income of less than RM42 for two decades.
Rising Figures Post-COVID-19 Special Withdrawals
According to the MOF, the number has risen compared to 4.7 million members or 37% recorded in April 2020, pre-COVID-19 special withdrawals.
The MOF underscores the far-reaching impact of accelerated population ageing, affecting the nation economically, socially, and in terms of quality of life and health.
Response to Government Initiatives Inquiry
The MOF’s response addresses concerns raised by Zulkifli Ismail (PN-JASIN) regarding government initiatives in mitigating inadequate retirement funds, particularly considering the substantial informal sector and a higher dependency ratio in Malaysia.
EPF Contribution Matching Incentives to Boost Voluntary Contributions
The 2024 Budget outlines an increase in the government’s contribution matching limit for the i-Saraan program from RM300 to RM500 annually. This incentive is subject to a maximum limit of RM5,000 for eligible individuals throughout their lifetime.
Moreover, the government plans to introduce contribution matching incentives for voluntary contributions through the i-Suri program.
Households led by individuals under 55 and registered in the e-Kasih database may receive a lifetime incentive of RM3,000 per individual, capped at RM300 annually.
Strategies for Rebuilding Affected Retirement Savings
The MOF states that EPF’s strategies and initiatives aim to assist members in rebuilding their affected retirement savings. Members with employers have the flexibility to contribute more than the statutory 11% at any time.
Additionally, individuals can make voluntary contributions, subject to an annual limit of RM100,000 starting June 1, 2023.
Enhanced Payment Channels for Member Convenience
To simplify EPF transactions for members, various payment channels have been introduced, including the i-Account application, internet banking, Bank Simpanan Nasional (BSN), bank agent counters, and EPF counters.
Promotional efforts, such as the “Let’s Add” campaign and outreach programs, are actively pursued to increase EPF contributions.
Collaborations with agencies like the National Film Development Corporation Malaysia (FINAS), Malaysia Digital Economy Corporation (MDEC), and gig platforms like Grab Malaysia and GoGet Malaysia aim to promote and provide direct contribution channels for gig workers to save for retirement.
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