73% Of EPF Members Don’t Have Enough Savings for Retirement

According to the Employees Provident Fund (EPF), RM101 billion had been disbursed to more than 7.4 million members to cope with the Covid-19 pandemic. Nearly half of all EPF members withdrew their funds through special withdrawal facilities like i-Citra, i-Sinar, and i-Lestari.

The three special withdrawals have left 73% or almost three-quarters of EPF members in a critical state of having insufficient funds to retire above the poverty line, it said in a statement today.

EPF members need to work an extra 4 to 6 years to rebuild savings

The EPF also estimated that members would need to work an additional four to six years to rebuild savings that have been utilised during the pandemic. The withdrawals also caused a major drop in the percentage of EPF members meeting the Basic Savings threshold (RM240,000 at age 55), from 36% in 2020 to an estimated 27% by the end of 2021. 

Addressing this matter, the EPF said future special withdrawals would require serious consideration. 

The EPF said that even though the exceptional withdrawals granted financial relief to its members throughout the pandemic, the withdrawals caused 6.1 million members to now have less than RM10,000 in their EPF accounts. 3.6 million of them have less than RM1,000, which left them vulnerable for their retirement.

In a statement, the EPF added that the decrease in savings is especially worrying for Bumiputera members, as they made up 78% of the withdrawal applicants. Subsequently, 4.4 million Bumiputera members now have less than RM10,000 in savings, while 2.0 million have less than RM1,000. 

Additionally, it said that the distribution of savings has become more skewed.

According to the EPF, about 5.0 million EPF members (bottom 40%) saw their savings decrease by 38% to just RM8 billion, translated into a median savings balance of RM1,005. The middle 40% also saw a drop of 18% to RM155 billion or a median balance of RM24,995. 

Only the top 20% of EPF members aged below 55 experienced an improvement in savings, but it translates to a median of RM152,043 or equal to only RM633 per month for 20 years. 

According to the EPF, 73% of its members do not have enough savings for retirement.

Fundamental reforms for the social protection system

Meanwhile, the EPF noted that the newly tabled Budget 2022 allocated RM4.8 billion for Inisiatif Jamin Kerja Keluarga Malaysia (JaminKerja) and RM8.2 billion for Bantuan Keluarga Malaysia (BKM). The budget also added several measures to assist Malaysians, which the EPF said exemplified the government's firm stance to strengthen the social protection agenda for the people.

The EPF said it could also be seen especially in the continuation of Kasih Suri Keluarga Malaysia and i-Saraan incentives. These facilities go some way towards addressing the shortcomings of Malaysia's social protection system for the unprotected members of society to ensure they have access to at least a minimum living standard, even during extraordinary times.

According to the EPF, the Malaysian Social Protection Council (MySPC) oversees the social protection agenda. Chaired by the Prime Minister, MySPC is currently researching fundamental reforms to Malaysia's social protection system. 

The EPF said that it fully supported these initiatives and would work closely with the government to ensure a protected and secure future for its members and the people. 

Source: The Edge Markets

Articles that may interest you 
Budget 2022: Everything HR and Employers Must Know
Employers Can Now Get COVID-19 Self-Test Kits From SOCSO 
Here are the Proposed Amendments to the Employment Act and OSHA