KUALA LUMPUR: As of January this year, 35% of Employees Provident Fund (EPF) contributors who are 54 years old have savings below RM10,000.
Deputy Finance Minister Steven Sim said this group, consisting of 94,827 individuals, make up the biggest chunk of 54-year-old contributors who are one year away from being able to withdraw all their retirement funds.
“This records the largest percentage where 35% of them have combined savings of RM246.1mil,” Sim told the Dewan Rakyat here yesterday, adding that as of January, EPF had 274,715 contributors aged 54.
Collectively, more than half or 58% of these 54-year-old EPF members have less than RM100,000 in their retirement savings.
The Finance Ministry has said that members should have at least RM240,000 in their EPF savings by the time they reach 55 in order for them to retire and live on RM1,000 per month for the next 20 years.
Sim had said that among 54-year-old contributors, 8% had RM10,001 to RM20,000 in savings, 13% had RM20,001 to RM50,000, 12% had RM50,001 to RM100,000, and 13% had RM100,001 to RM200,000.
He added that 4% of contributors aged 54 have between RM500,001 and RM1mil in savings, while about 2% of contributors aged 54, or 4,877 individuals, have more than RM1mil in savings with a combined total of RM7.9bil.
Sim was responding to Kuala Selangor MP Datuk Seri Dr Dzulkefly Ahmad who had asked about the breakdown of savings among 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 pays individual income tax,” he added.
In response, Sim said low EPF savings is a legacy problem inherited from previous governments, and structural reforms were needed.
“Among EPF’s steps to increase savings was to create other channels to contribute to EPF,” he said.
He added that EPF members can opt for voluntary contributions where they can deposit up to RM100,000 a year.
Sim also said that details of a third EPF account will be made public next February.
It was reported in July that EPF’s proposed Account 3 would allow contributors to withdraw their savings at any time.