35% of EPF members at age 54 have below RM10,000 in savings, Dewan Rakyat told

KUALA LUMPUR: As of January, 94,827 or about 35% of the 274,715 Employees Provident Fund (EPF) members aged 54 have less than RM10,000 in their savings.

Meanwhile, 4,877 or approximately 2% of EPF members of that age have more than RM1mil in their respective accounts, the Dewan Rakyat was told on Wednesday (Nov 29).

Deputy Finance Minister Steven Sim said the combined savings of the 35% amounted to just RM246.1mil, while the 2% had combined savings of RM7.9bil.

Providing a further breakdown, he said 8% of members at that age have savings of RM10,001 to RM20,000; 13% have RM20,001 to RM50,000; 12% have RM50,001 to RM100,000; and 13% have RM100,001 to RM200,000.

He also said 4% have RM500,001 to RM1mil in savings.

During Question Time in the Dewan Rakyat, Datuk Seri Dr Dzulkefly Ahmad (PH-Kuala Selangor) had asked about the breakdown of savings of EPF members aged 54.

Dr Dzulkefly then said low retirement savings is a major problem among Malaysians who are heading towards their golden years.

“There is no quick fix to this issue. We also know that only 16.5% of the workforce paid individual income taxes,” added Dr Dzulkefly.

In response, Sim said that low EPF savings is a legacy problem that requires structural reforms.

“Among EPF’s steps to increase savings is to create other channels to contribute to EPF,” he said.

Sim said EPF members may opt for voluntary contributions where they can put up to RM100,000 a year in savings.

Sim also said there was an initiative by Putrajaya to extend the contribution limit for the i-Saraan programme to RM500 per year, limited to RM5,000 for life; and for the i-Suri programme, it will be increased to RM300 per year, limited to RM3,000 for life.

Meanwhile, Dr Abd Ghani Ahmad (PN-Jerlun) asked a supplementary question about updates on the proposed third EPF account, or flexible account.

According to Sim, an announcement on the third EPF account will be made in February after EPF announces its dividends.

“There will also be announcements on how to encourage public participation in EPF,” the Deputy Minister added.

In July, the EPF was reported to be looking into introducing Account 3, which would allow savings withdrawals to be made at any time.

The proposal to introduce the account was also to meet potential emergency cash needs.

At present, the EPF savings scheme structure for members under 55 consists of Account 1 and Account 2, divided according to a percentage of 70% and 30% respectively.