EPF withdrawals larger than GDP of some countries, says fund's CEO

SHAH ALAM: The RM145.5bil withdrawal of Employees Provident Funds (EPF) was bigger than the individual gross domestic product (GDP) of some 100 countries and territories, says Datuk Seri Amir Hamzah Azizan.

"That is how much we have taken out," the EPF chief executive officer said during his presentation of the fund’s 2022 Financial Performance.

He noted that the Bumiputera and Indian members below age 55 saw a higher erosion of saving levels due to the multiple pandemic related withdrawals.

As at April 2020, the median savings of Bumiputera members were at RM15,500 but that had now shrunk to RM4,900 as of Dec 2022.

"The basic savings (for this group) has been reduced by 70% because of the withdrawals," he said while noting on the prevalence of withdrawals in the community.

The Indian community saw about a 40% drop in their median savings from RM25,700 to RM14,900.

Chinese Malaysians, on the other hand, only saw a 1% drop in their median savings from RM45,800 to RM45,200.

"The Chinese community have been pretty well grounded," he said.

"For us we cannot allow more withdrawals because the base now has gotten too low for some groups," he said.

As for income groups, the Top 20 group which had 2.6 million members saw a 9% increase in their median savings from RM140,440 as at April 2020 to RM152,964 as at Dec 2022.

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The median savings for the Middle 40 shrunk by 34% from RM30,113 to RM19,926.

The median savings for the Bottom 40 plunged 76% to RM577 from RM2,434. There were 5.2 million members in the M40 and B40 groups respectively.

He noted that the inadequate retirement savings remained a challenge as only 19%, or 2.5 million members, had achieved the minimum basic savings threshold of RM240,000 by the age of 55.

"The scary thing for EPF is actually the number we showed earlier. Only 19% of our active members today have reached the threshold that we have set for basic savings.

"We need to do better, the country needs to better. The country needs to focus in terms of addressing a potential retirement crisis," he said.

"The withdrawals has not helped," he said.

However, only 3%, or 350,000, had achieved the adequate savings threshold of RM600,000.

Amir said as life expectancy increased, it was important to ensure that the savings were higher.

He noted that members between the age 30 to 50 had a higher probability of achieving the basic savings threshold.

For 2022, the EPF declared a dividend rate of 5.35% for Conventional Savings for 2022, with a total payout amounting to RM45.44bil as well as a 4.75% for Syariah Savings, with a payout amounting to RM5.7bil.

In total, the retirement fund’s payout for 2022 amounts to RM51.14bil.