SHAH ALAM: An average of RM400mil is withdrawn from the Employees' Provident Fund’s (EPF) Flexible Account each month, says Ahmad Zulqarnain Onn.
The EPF chief executive officer said the balance in the Flexible Account stood at slightly under RM8bil, as of the end of last year.
This year, the retirement fund is anticipating some RM11-RM12bil to go into the Flexible Account. Of this, withdrawals are projected to amount to RM5bil.
“In the grand scheme of things, it is something very manageable given the asset size of RM1.25 tril today and increasing all the time,” he said during the presentation of EPF’s Financial Performance 2024 on Saturday (March 1).
"We are not worried about the asset management or liquidity standpoint in dealing with the Flexible Account,” he added.
He said the Flexible Account balances will increase year-on year, barring unforeseen circumstances such as special withdrawal schemes or economic shocks.
Ahmad Zulqarnain said it would take another 30 years before withdrawals exceed contributions.
According to EPF statistics, 7.2 million members had savings of RM10,000 and below while 130,000 have RM1mil and above.
This is out of the EPF’s 16.22million contributors.
Ahmad Zulqarnain also said the country’s ageing population is a demographic "timebomb" that has to be addressed.
“The pension reforms that are required and we are in discussion with many policymakers surrounding this is how do we redesign the retirement system in Malaysia to address some of these issues,” he said.
He said pension funds are like three-legged stools consisting of state pensions, occupational pension which the EPF is and private pension which includes a private retirement scheme and an individual’s own savings.
What Malaysia is missing is a state pension scheme, however, Ahmad Zulqarnain said this would come with its own challenges such as how to fund such a scheme.
On the EPF’s part, he said the retirement fund is looking to spur voluntary contributions which are done through engagements and outreach initiatives.
“Medium term reforms are required. We have to move away from the current model of lump sum withdrawals,” he said.
The Flexible Account or Account 3 was introduced last year to assist EPF members in managing short-term financial needs that could negatively impact their well-being in retirement if left unmet.
