DEPUTY Finance Minister Steven Sim Chee Keong revealed that 94,827, or approximately 35%, of the 274,715 Employees Provident Fund (EPF) members aged 54, possess less than RM10,000 in savings as of January.
In contrast, 4,877 members or approximately 2% have accumulated over RM1 mil in their accounts.
The total savings of the 35% with lower balances amounted to just RM246.1 mil while the 2% with higher balances had a combined savings of RM7.9 bil.
Moreover, further breakdowns showed that 8% of members in this age group have savings of RM10,001 to RM20,000; 13% have RM20,001 to RM50,000; 12% have RM50,001 to RM100,000; and 13% have RM100,001 to RM200,000.
He also said 4% have RM500,001 to RM1mil in savings.
Addressing the issue during the Dewan Rakyat Question Time, Kuala Selangor MP Datuk Seri Dr Dzulkefly Ahmad highlighted the challenge of low retirement savings particularly among Malaysians nearing retirement.
“There is no quick fix to this issue. We also know that only 16.5% of the workforce paid individual income taxes,” said Dr Dzulkefly.
Sim acknowledged the complexity of the issue, describing low EPF savings as a legacy problem that necessitates structural reforms.
“Among EPF’s steps to increase savings is to create other channels to contribute to EPF.”
Sim outlined steps taken by EPF to enhance savings, including the option for members to make voluntary contributions of up to RM100,000 per year. He also mentioned initiatives by Putrajaya to extend contribution limits for the i-Saraan programme to RM500 per year, limited to RM5,000 for life; and for the i-Suri programme, it will be increased to RM300 per year, limited to RM3,000 for life.
Furthermore, responding to a question about the proposed third EPF account or flexible account from Jerlun MP Dr Abd Ghani Ahmad, Sim indicated that an announcement would be made in February after EPF announces its dividends.
“There will also be announcements on how to encourage public participation in EPF.”
The introduction of Account 3, allowing withdrawals at any time, aims to cater to potential emergency cash needs and encourage public participation in EPF.
At present, the EPF savings scheme structure for members under 55 consists of Account 1 and Account 2, divided according to a percentage of 70% and 30% respectively. – Nov 29, 2023
Main photo credit: Reuters