Saving right for retirement

Farizan talking about the issues and challenges of financial planning, while providing an overview of EPF and changes coming to the EPF scheme at the StarLIVE talk.

StarLIVE talk by EPF gives participants opportunity to learn about financial issues and services

IT was Lim Kim Yoke’s battle with cancer that led her to withdraw savings from her Employees Provident Fund (EPF) account in 2012.

She was diagnosed with third-stage ovarian cancer and later breast cancer in 2013, which then affected her colon and lymph nodes two years later.

The cancer survivor regaled trials she endured that put a burden on her expenses, at the StarLIVE talk by EPF strategy planning head Farizan Kamaluddin on “Financial Literacy: Saving Your Future” organised by Star Media Group Bhd on Nov 12.

Lim was among those who attended the talk about issues faced by individuals and services regarding the EPF scheme.

Participants were encouraged to start saving at a young age and retain contributions in the EPF scheme without withdrawing for as long as possible to leverage on compounding dividends, which greatly assists in the accumulation of savings.

“Malaysia is the fastest ageing nation in South-East Asia and eight out of 10 Malaysians are not covered by insurance,” said Farizan.

She said one in five people run into debt because of medical problems, 31% of suicides by 30- to 50-year-olds are caused by financial problems and 25,000 individuals from the Gen-Y group have been declared bankrupt since last year.

She said the challenges individuals in Malaysia faced stemmed from the lack of retirement savings, weakening family structures, low financial literacy rate, increasing averages of life-expectancy rates as well as expenditure behaviour.

“The main issue for Malaysians right now is that they are not ready for retirement and if the necessary steps are not taken, things will only get worse in 10 years.”

The EPF savings objective is to act as a retirement fund for individuals who have stopped working, she said.

“People need to be concerned if what they have saved is enough to fund the rest of their lives because the retirement age is 55, but the average life expectancy is 78 for women and 73 for men, so people may have more than 20 years to live without working for a steady income.”

The EPF scheme allows for early withdrawals for expenses relating to housing, health or education.

However, rather than spending on house renovations using money from EPF, Farizan advised everyone to live within their means.

“The younger generation today accumulates liability even before they start earning. They are living on credit because the cost of living is very high, so they rely on family instead,” said Farizan.

Despite the doom and gloom, Farizan gave several options including reaping the benefits of compounded savings.

“One option would be to contribute more than the statutory imposed rate of EPF as members need to think about how to leverage on compounding dividends before the withdrawal age of 55.

“Topping up savings can be done at any time until the person reaches 55, or using the 1Malaysia Retirement Savings Scheme for self-employed individuals or individuals without a fixed monthly income such as housewives that have a minimum of RM50 to a maximum of RM60,000.”

Farizan added that as EPF celebrates its 65th anniversary this year, its aspirations are to create a better retirement future for members through financial security to ensure a consistent and secure income for life.

This includes health programmes to provide independent living by encouraging healthy lifestyles leading to lower medical expenses.

“Our approach to enhance the EPF scheme will be to increase members’ savings and contributions to lengthen the accumulation phase for retirement savings and empower their financial decisions to educate people on the importance of financial and retirement planning by providing advisory services.”

Amendments to the EPF Act 1991 include initiatives to introduce withdrawals at age 60, a new basic savings quantum due to the hike in standards of living, introducing EPF Simpanan Syariah, and more withdrawal options for foreign workers.

“Amendments will take place on Jan 1, 2017 with the introduction of withdrawals at 60 as the prolonged accumulation phase of five years make a difference, although the option for full withdrawal at age 55 remains.

“The new basic savings quantum will change from RM196,800 to RM228,000 in January 2017, set according to the poverty line so retirees are able to at least live above the poverty line,” she said.

The two-hour long StarLIVE talk was held at Cybertorium in Menara Star, Petaling Jaya.

For details on other StarLIVE sessions, visit

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