Experts urge employees to put thought into retirement savings scheme

Farizan urging EPF members to diversify their savings for retirement.

Do not rely solely on the Employees Provident Fund (EPF) for retirement, said EPF strategy planning head Farizan Kamaluddin, urging members to diversify their savings for their golden years.

“This is why we consider the Private Retirement Scheme (PRS) a complement to EPF and Malaysians should take advantage of the income tax relief given by the Government of RM3,000 a year if they apply for PRS,” she said during her talk on “EPF Scheme & Retirement Planning” at Menara Star in Petaling Jaya recently.

The Retirement Plan Workshop was organised by Star Media Group Bhd (formerly known as Star Publications (M) Bhd) and EPF.

Farizan said those who could afford to have PRS or other financial options to help with savings for retirement should plan now.

“Members should save early and as much as possible to enjoy the power of compounding dividends on their savings,” she said.

Ong advised the public to use PRS as a tool to save up for retirement.

She said this after outlining the challenges that Malaysians would face in future with a majority not ready for retirement because of various reasons, such as longer life expectancy, low financial literacy, increase in debts and higher cost of living.

“Some 53 Malaysians are going bankrupt every single day,” she said, adding that most cases had to do with loans.

“About 25% are bankrupt because of outstanding car loans. Is it worth getting bankrupt over a car?”

She added that a majority of Malaysians might suffer in the event of emergencies with 86% of urban households having zero savings.

Farizan also said a survey across Asia by the Economist Intelligence Unit showed that one in five working-age Asians was now a member of the “sandwich generation”.

“The sandwich generation is made up of adults who are supporting their parents and are either raising or supporting a grown child,” she said.

Farizan also advised members to use the EPF calculator tool on its website to estimate how much savings they need when they retire and compare that with their current savings, current salary and current contribution as well as what they will get at the age of 55 and 60.

“Then they’ll be able to estimate how to increase their savings,” she said.

She said members should decide how much they want to receive a month in future.

“If they want RM4,000 a month, they need to save about RM960,000,” she said.

Earlier at the same event, Private Pension Administrator Malaysia chief executive officer Datuk Steve Ong advised the public to use PRS as a tool to save for their retirement.

“Start early and set aside 10% of your monthly income to it.

“Choose any provider of PRS – you can even pick two providers.

“If you are not satisfied with the service after a year, you can always change providers,” he said.

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