PETALING JAYA: Automatic registration with the Employees Provident Fund (EPF) at age 18 must go beyond encouraging early saving to help young people build sustainable habits, make informed decisions, and secure long-term financial security, say experts.
The initiative, announced under Budget 2027, will see all Malaysian citizens automatically registered as EPF members upon turning 18.
Linnet Lee, a licensed financial planner at Resolute Planning, noted that a basic rule of thumb for retirement planning is to start saving at least 20 years before an intended 20-year retirement period.
“If you can start earlier, it will be better,” said Lee, a Certified Member of the Financial Planning Association of Malaysia.
Assuming a retirement age of 59, Lee illustrated the power of early saving: an individual contributing RM100 monthly starting at age 18 could accumulate RM178,490 by retirement. By contrast, starting at age 25 yields RM115,711, while starting at age 30 yields RM83,282.
These figures assume an effective annual return of 5.5% compounded monthly, excluding inflation, fees, or taxes.
“This illustrates two powerful financial-planning principles: start early and invest consistently,” Lee explained, adding that even small monthly contributions accumulate meaningfully over time through compounding, though actual returns are not guaranteed.
Financial literacy advocate Amy Seok noted that while automatic registration is a positive step, its real success depends on converting account holders into active and consistent savers.
“We must distinguish between automatic registration and actual savings, as having an EPF account does not necessarily mean a young person will begin contributing regularly,” Seok said. She said that the initiative’s true potential lies in introducing long-term financial responsibility early in life.
“Young Malaysians do not necessarily need large incomes to begin saving. What matters is developing the habit early and allowing time and compounding to support their financial future,” she added.
To maximise the policy's impact, Seok called for strengthened financial education across secondary schools, tertiary institutions, and vocational colleges.
She suggested that the EPF introduce youth-friendly digital tools, simple retirement calculators, and practical savings challenges to motivate young members to make voluntary contributions.
“Financial education must go beyond theory,” Seok said. “Young people should be encouraged to develop practical habits, such as setting aside a portion of part-time earnings, allowances, or their first salaries for long-term savings.”
