KUALA LUMPUR: The Employees Provident Fund (EPF) has drawn up four proposals to boost contributors’ savings – and has left it to its 14 million members to decide on which they want to accept.
For two weeks from today (Tuesday), members will be able to give their views on the proposals online. The proposals include raising the age for full withdrawal from 55 to 60, a subject which has created much controversy.
“We will only make changes after taking into account feedback from our members,” EPF chief executive officer Datuk Shahril Ridza Ridzuan told the media at the fund’s headquarters yesterday when announcing the consultation process.
The proposal to increase the full withdrawal age from 55 to 60 comes with two options.
The first is to increase the minimum age for full withdrawal from 55 to 60 in stages, over a 15-year period starting next year until 2031.
The second allows for full withdrawal at the age of 55 but all subsequent contributions are locked in the fund until the member retires at 60. The option to withdraw a third of the contributions at the age of 50 stays.
Under the first option, EPF contributors who are 52 this year will still be able to make a full withdrawal when they turn 55.
Those currently aged 43 and below, however, will have to wait until they turn 60 before they can fully withdraw their accounts (see graphics).
The EPF has also drawn up another proposal to align the minimum contributions with the minimum wage legislation.
The proposal would make it compulsory for employers of workers on minimum wage – RM900 a month in the peninsula and RM800 in Sabah, Sarawak and Labuan – to calculate their share of EPF contributions based not just on their workers’ basic salary but on their allowances as well.
The third proposal is to formalise an undertaking by the EPF that it would pay dividends to members who choose to keep their money with the fund until they reach the age of 100. This suggestion is aimed at encouraging members to keep their money with EPF longer.
The fourth proposal is to introduce syariah-compliant retirement savings in addition to the existing retirement scheme.
The terms of all other current EPF withdrawal schemes such as for housing, medical treatments and education will remain unchanged.
Shahril said the proposals were necessary because many members either did not have enough when they retired or exhausted their EPF savings soon after.
“About 78% of active members do not achieve a minimum basic savings of RM196,800 needed to fund their retirement when they reach the age of 54.
“In addition to this, 68% of members aged 54 have savings less than RM50,000, which can only last five years,” he said.
Shahril said Malaysians also needed more money for retirement due to the increasing life expectancy, which had gone up from an average of 72.9 years for males and 77.6 for females in 1990, to 73.5 years for males and 78.2 for females this year.
Information on the proposals and options are available at the myEPF website at www.kwsp.gov.my.
Shahril said EPF would also brief other stakeholder groups on the proposals, namely the Malaysian Trades Union Congress, Malaysian Employers Federation, MPs, government agencies and other relevant organisations.