Retirement money, retiree's choice
PETALING JAYA: EPF funds are hard-earned savings of Malaysians and it is unfair for the government to dictate how retirees should spend them, says MCA vice-president Datuk Seri Dr Wee Jeck Seng ( pic ).
He said a proposal under the 13th Malaysia Plan (13MP) to include the introduction of a monthly EPF pension scheme was expected to replace the current system, which allowed full withdrawals in one lump sum upon retirement.
He said while the MCA acknowledged that the proposed reform was aimed at reducing the risk of retirees depleting their savings prematurely, such conditions restricted the freedom and flexibility of EPF members in spending their funds.
Wee, who is the Tanjung Piai MP, said instead of enforcing a mandatory approach, the government should give members the freedom to choose or opt for the new scheme.
'We urge the government to reconsider and listen to the rakyat. EPF savings are accumulated over many years of hard work.
'It is not fair for the government to dictate how retirees should use their own money.
'Many members approaching retirement may already have plans in place and their choice of how to spend their savings should be respected.
'If this reform is to be implemented, it must be flexible and not be a rigid one-size-fits-all policy,' he said in a statement.
Wee said with notable gaps in the current proposal, the government must ensure transparency is in place and the interests of EPF members are protected on how they choose to access their funds.
According to the 13MP tabled on Thursday, the government was considering introducing a monthly pension payout under the EPF, in addition to the current lump-sum withdrawal option, to provide retirees with a more stable income stream.
Meanwhile, the EPF said any decision on a monthly pension payout scheme for its members will be made after thorough engagement with key stakeholders and careful consideration of long-term interests.
It said the government's proposal under the 13MP was currently under review.
'In the meantime, current EPF rules and withdrawal mechanisms remain unchanged.
'Any updates will be communicated through official and timely channels once available,' it said in a statement.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New Straits Times
37 minutes ago
- New Straits Times
Budget 2026 to sharpen Malaysia's edge in high-value sectors
PUTRAJAYA: Budget 2026, to be tabled on Oct 10, will focus on enhancing Malaysia's competitive edge in high-value industries such as semiconductors, renewable energy, the Islamic economy, digitalisation and Artificial Intelligence (AI), while also raising the floor through inclusive and targeted measures. The budget – the fourth under Prime Minister Datuk Seri Anwar Ibrahim's leadership – will be the first to support the development policy framework of the 13th Malaysia Plan (13MP). At the start of the first engagement session this morning, which saw the participation of nearly 300 stakeholders from various sectors, Finance Minister II Datuk Seri Amir Hamzah Azizan said the upcoming budget aims to reflect the aspirations of all Malaysians. "Budget 2026 is the first to support the 13MP. The measures introduced will continue to raise both the ceiling and the floor, grounded in good governance," he said. Despite the ringgit emerging as one of Asia's best-performing currencies – strengthening to RM4.23 against the US dollar, a nearly five per cent gain as of Aug 5 – the government remains committed to taking Malaysia to greater heights. Amir Hamzah said Malaysia's regional competitiveness remained intact, following the United States' decision to lower tariffs to 19 per cent – rates now on par with those granted to regional peers such as Indonesia, Cambodia, and Thailand. To further build economic resilience, the government will prioritise empowering Small and Medium Enterprises (SMEs) to produce goods and services that are distinctly "Made by Malaysia." He added that Budget 2026 will also focus on raising the floor – through improved delivery of government services, reforms in education and healthcare, enhanced social protection, and targeted assistance for vulnerable groups. This morning's session also served as a platform to gather feedback on improving the ease of doing business in Malaysia. Budget 2026 is the first to be developed based on policies introduced during Anwar's administration – rather than those inherited from previous governments.
Borneo Post
37 minutes ago
- Borneo Post
How Malaysians are growing old and going broke
With a population rapidly ageing, and a fall in birth rates leading to a contracting tax base, the fear that future retirees may not have enough to get by is rising. – AI IMAGE PETALING JAYA (Aug 7): Concerns with readiness for retirement are intensifying, just three years after the government first allowed people to dip into their nest egg to get through job losses during the Covid-19 pandemic. Employees Provident Fund (EPF) CEO Ahmad Zulqarnain Onn couldn't have stressed the point more succinctly in his call for prompt measures to be taken to ensure Malaysians are both financially and socially prepared for longer lifespans. Every projection now indicates that life expectancy could reach 81 years by 2050, just a quarter of a century away. With a population rapidly ageing, and a fall in birth rates leading to a contracting tax base, the fear that future retirees may not have enough to get by is rising. FMT takes a look at the escalating challenges of retirement affordability in Malaysia and how potential reforms today can secure workers' financial future tomorrow. Overview of Malaysia's retirement savings system Malaysia's primary retirement mechanism is EPF, a defined contribution (DC) scheme where individual and employer contributions, alongside investment returns, constitute an employee's retirement savings. A legacy defined benefit (DB) pension that ensures monthly payments based on final salary and tenure remains in effect for civil servants. The DB model, though secure for beneficiaries, imposes substantial long-term costs on public finances. Conversely, the DC approach is increasingly regarded as more sustainable globally, as it transfers investment and longevity risk away from the government, offers individuals enhanced control and portability, and presents fewer fiscal management challenges. Impact of Covid‑19 withdrawals Economic volatility of recent years has put the predictability of the DC model to the test. More than 8.1 million EPF contributors withdrew over RM145 billion from their savings during the pandemic, often to offset job losses or settle debts. Many have almost or entirely emptied out their reserves, with half of those aged 55 and below having been left with less than RM10,000 each. The median balance now stands at only RM10,898. Rising life expectancy The concerns are compounded by the fact that Malaysians now live longer. Men now average 74.8 years and women 78.9 years, up from 68.7 years for men and 73.4 years for women in 1990. If one retires at 60, and assuming he or she needs RM1,500 a month to sustain a decent life, he will need at least RM360,000 in the bank to last him up to two decades. However, as of 2023, nearly 74 per cent of active EPF members had accumulated less than RM100,000 each, which is insufficient for even five to six years – without considering escalating healthcare and elderly care costs. Demographic and fiscal challenges As birth rates fall, the tax base is shrinking, making it unsustainable to continue with a DB pension system. Malaysia's tax-to-GDP ratio was just 12.6% in 2023, far below the Asia-Pacific average of 19.3 per cent and the OECD average of 34 per cent. At the same time, the country's life birth rate fell by 10.2 per cent to 100,732 in Q2 2024 compared with the previous corresponding period, according to data from the department of statistics. If this trend continues, there will be fewer taxpayers and EPF contributors going forward, slowing fund growth just as more people join the ranks of retirees. In contrast, countries with generous DB pensions can sustain their retirees because they collect higher taxes and have built a large reserve. On the other hand, Malaysia has limited tax revenue and a smaller reserve, making it impossible to sustain a fully tax-funded pay-as-you-go pension scheme without major reform. Potential solutions To safeguard against the risk of exhausting retirement reserves, Malaysia must promote greater financial literacy, enhance saving incentives, develop a modest social safety net, and establish integrated aged-care facilities to support its ageing population. Introducing a hybrid pension scheme could restore some benefits of the former DB system while retaining sustainability. Within this framework, employees would continue contributing to their EPF accounts. However, upon retirement, only a portion could be withdrawn as a lump sum, with the remainder distributed as monthly payments throughout their lifetime. Such an arrangement partially reinstates the protective features of the legacy civil-service pension – a guaranteed lifelong minimum income – while avoiding the fiscal strain of a fully tax-funded model. Singapore's CPF Life serves as a relevant example, blending personal savings with lifelong payouts to prevent retirees from outliving their resources. This proposed hybrid reform holds promise for ensuring retirees maintain a basic standard of living, even if individual savings are depleted. Moreover, initiatives aimed at bolstering financial education and facilitating easier EPF top-ups – whether through matching contributions, tax incentives, or voluntary programmes – could meaningfully replenish and grow retirement savings. Urgency is mounting for comprehensive reform. By integrating individual responsibility with inter-generational support, Malaysia can help ensure that today's workers do not become tomorrow's financially vulnerable retirees. *This article was first published by epf reform retirees savings social protection
Barnama
an hour ago
- Barnama
Higher Retirement Age Only Suitable For Certain Sectors
KUALA LUMPUR, Aug 7 (Bernama) -- The proposal to raise the retirement age to 65 should be limited only to specific sectors that require expertise and intellectual skills, according to economist Dr Ahmed Razman Abdul Latiff. Ahmed Razman, who is from Universiti Putra Malaysia's Putra Business School, said the move should not be implemented across the board, as there are sectors that require physical strength, which may burden workers as they age. 'Sectors such as education, administration or consultancy are more suitable for considering a higher retirement age, as they rely on experience and critical thinking. But for jobs requiring physical labour, it may not be practical,' he told Bernama today. Yesterday, Chief Secretary to the Government Tan Sri Shamsul Azri Abu Bakar announced that the Public Service Department will carry out a comprehensive study on the proposal to raise the mandatory retirement age for civil servants to 65. He said the proposal is still at a preliminary stage and requires in-depth scrutiny before any decision is made. Ahmed Razman said the retirement age issue requires careful consideration, as Employees Provident Fund statistics revealed that the majority of contributors from the private sector do not have sufficient savings for retirement. He noted that any increase in the retirement age must be implemented as part of a multi-pronged strategy, including strengthening social protection, utilising wakaf (endowment) assets and introducing the concept of a time bank to address the challenges of caring for an ageing population, as Malaysia is expected to become an aged nation by 2043. He explained that a time bank allows individuals to contribute time and effort while they are young, which can later be credited and redeemed as care services in old age, thereby reducing care costs and easing the government's fiscal burden. Previously, Prime Minister Datuk Seri Anwar Ibrahim, when tabling the 13th Malaysia Plan in the Dewan Rakyat on July 31, stated that the mandatory retirement age will be reviewed in line with Malaysia's transition towards an aged nation.
