SHAH ALAM: An average of RM400mil is withdrawn from the Employees Provident Fund’s (EPF) Flexible Account each month, but it would take another 30 years before withdrawals exceed contributions to the account, said EPF CEO Ahmad Zulqarnain Onn (pic).
He 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 RM11bil to RM12bil to go into the Flexible Account, which is projected to see withdrawals of up to RM5bil.
“In the grand scheme of things, it is something very manageable given the asset size of RM1.25 trillion today, and increasing all the time,” he said at the unveiling of EPF’s Financial Performance 2024.
“We are not worried about the asset management or liquidity standpoint in dealing with the Flexible Account,” he said, adding that barring unforeseen circumstances such as special withdrawal schemes or economic shocks, the Flexible Account balances will increase year-on year.
According to EPF statistics, of its 16.22 million contributors, 7.2 million members had a savings of RM10,000 and below, while 130,000 have RM1mil and above.
On another matter, Ahmad Zulqarnain said the country’s ageing population is a demographic “time bomb” that has to be addressed.
“Pension reforms are required, and we are in discussions with policymakers on how to redesign the retirement system in Malaysia to address some of these issues.”
He said pension funds are like three-legged stools consisting of state pensions, occupational pension (which the EPF is) and private pension, which is a combination of a private retirement scheme and an individual’s own savings.
What Malaysia is missing is a state pension scheme.
On 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, and we have to move away from the current model of lump sum withdrawals,” he said.
Also known as Account 3, the Flexible Account was introduced last year to assist EPF members in managing short-term financial needs
Savings in the Flexible Account, consisting of up to 10% of a member’s funds in EPF, can be withdrawn any time, subject to terms and conditions, though members are encouraged to withdraw it only for emergencies.
