PETALING JAYA: More than 90% of EPF members under 30 need more basic savings for retirement, says Khazanah Research Institute.
Its Households and the Pandemic 2019-2022: The State of Households 2024 (SoH 2024) report released Thursday (Sept 26) said that only those in the 10th decile (D10) in the below 30-year age group have the required amount needed for basic retirement.
According to EPF’s estimation, an individual needs to have a minimum of RM35,000 by age 30 to achieve basic retirement savings of RM240,000 by age 55.
“Using this metric, the data shows that over 90% of members under 30 do not have enough basic savings of RM240,000 by retirement age.
“This highlights the structural issue of low starting salaries among those beginning to enter the job market as they cannot achieve the basic EPF contribution for retirement,” it said.
The report added that similar trends persist for those in the 30–54-year-old age group, as only contributors from the D10 group have the required basic savings of RM240,000 by the age of 55.
“However, within this age group, there may have been withdrawals made from their Account 2, which allowed for limited withdrawal purposes such as further education, first home and others,” it said.
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The report added that the pandemic also caused a decline in EPF savings from 2019 to 2022, particularly for those in the 30-54 age group with various relief programmes such as i-Lestari, i-Sinar, i-Citra and the 2022 Pengeluaran Khas introduced in 2020 to 2022 that allowed for the partial withdrawal of EPF savings.
“The issue of low savings, attributed to the structural issue surrounding stagnant wages, remains a key concern for policymakers,” it added.
KRI urged that the target of RM250,000 savings be re-examined as it may be insufficient, considering Malaysia’s increasing life expectancy.
It also assumes that Malaysians only use RM1,000 per month for 20 years.
“Individuals approaching their respective retirement ages and beyond may face increased adversities such as health and disability risks alongside the depletion of their retirement savings,” it said.
