Focus View
EPF needs to fine-tune enhancement initiatives
None | 02 Mar 2018 00:30

As the country’s pre-eminent retirement fund for private sector workers, the Employees Provident Fund (EPF) has introduced various enhancements to its schemes and policies to benefit its contributors lately.

In its recent move, the fund has raised the amount under the EPF members’ investment scheme (EPF MIS) for qualified members while maintaining its high-performance benchmark for fund management institutions (FMIs) and unit trust funds.

The EPF MIS allows members to transfer part of their savings from Account 1 for investments through the appointed FMIs as an option to diversify their retirement portfolio and enhance their retirement savings.

Last December, the EPF unveiled four enhancements to its schemes effective Jan 1 as part of its continuing efforts to improve and meet members’ increasing expectations.

The key change was to the Age 55 and 60 withdrawal payment options which allow members to make 

partial withdrawals of any amount at any time, as opposed to the previous policy that only allowed withdrawals of a minimum of RM2,000 once every 30 days.

The other changes included giving members the option to appoint Amanah Raya Bhd as the nominee/administrator or trustee to their EPF savings, flexible withdrawal policy until age 100, and extension of the death benefit from age 55 to 60.

While the EPF should be lauded for making changes to its schemes and policies to benefit its members, it needs to monitor these changes to ensure they do not have longer-term implications that could affect contributors’ retirement savings.

For example, the change allowing EPF members to invest more funds in unit trusts could backfire if contributors invest in schemes which do not perform well, as this could eat into their retirement nest egg.

Also, allowing qualified contributors to make partial withdrawals of any amount at any time may result in some of them withdrawing excessively from their accounts.

As such, the retirement fund needs to make the necessary adjustments if some of its enhancement initiatives have unexpected repercussions.

 



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