SOME 73% of Employees Provident Fund (EPF) members have not nominated their beneficiary as of Sept 30 this year.
This statistic was revealed during the financial literacy talk hosted by StarLive on the topic “Are Your Retirement Savings Sufficient?” at Menara Star in Petaling Jaya on Saturday.
EPF strategic management manager Jamaliah Awang was the speaker.
The alarming figure raised concerns among those present at the talk.
One guest, C.K Wong, suggested that EPF make it compulsory for contributors to nominate a beneficiary.
“I suggest that EPF include our beneficiary’s name in our yearly statement. In that way, we would know who we have nominated,” he said.
Jamaliah said new EPF members were alerted to include their beneficiaries by their employers.
She urged those who were unsure to visit the nearest EPF branch to check on their beneficiary status.
During the talk, it was revealed that EPF Act 1991 supersedes any will written by the member pertaining to their EPF savings.
“Please go and nominate your beneficiary for your EPF savings at EPF.
“If you have written a will and included your beneficiary for your EPF, it will not count. Your will cannot override the EPF Act,” she said.
In terms of financial planning, Jamaliah recommended that people start at a younger age to reach their retirement objective.
She advised young parents to plan their children’s higher education early.
“When they plan early, they will arrive at their retirement age well.
“In the past, people would look out for scholarships for their education or turn to education loans.
“However, there may come a time when parents would need to finance their children’s education entirely,” she said.
She added that a person’s marital status might change, too, so it was best to start planning early.
Jamaliah also encouraged youngsters to differentiate their wants from needs.
“Think before you spend if your earnings should be used to fulfil your wants. Always ask yourself before you purchase if it is a want or a need.
“It is normal for people to spend on holidays and gadgets, but think before spending the money,” she said.
Jamaliah said some 85% of Malaysians regret not saving more for their retirement.
As a result of the increase in life expectancy, there is now a generation of adults who care for their parents and their own children and grandchildren called the “Sandwich Generation”.
The older and younger generations must have a brief plan on how they could share their finances.
“If your parents have property, maybe you can convert the property into cash by renting out the place.
“This money could be used to care for them. Meanwhile, there should be house rules whereby everyone contributes to the household income to ease each other’s burden,” she said.
During the talk, it was revealed that Malaysians live longer now compared to in the 1950s. This would require them to have enough savings for their golden years.
Average life expectancy is now 75, compared to 50 back then.
It is projected that by 2030, our country would have an aged population, with 14% of Malaysians being over 60.
Based on the World Health Organisation’s statistics, it is estimated that people would lose their healthy life expectancy in their last 10 years for females and seven years for males.
According to EPF’s statistics, 62% of active members do not achieve the basic savings quantum and only 222,654 members reach the basic savings level at the age of 54.
The top five illnesses related to EPF withdrawals were cancer, stroke, coronary heart disease, congenital heart disease and kidney failure.
In 2013, some 18% of Malaysians ran into debt because of high medical expenses.
Some 57% of Gen Y spend half of their salaries on social purchases like holidays and technology-related items while 75.6% of young Malaysians do not have insurance.
EPF provides free financial and retirement planning advice. For details, visit EPF’s Retirement Advisory Services, call 03-8922 6000 (EPF Contact Management Centre) or visit www.kwsp.gov.my/portal/en/web/kwsp/home