CEO Morning Brief

Over 94,000 EPF Members Aged 54 Have Savings Below RM10,000, Says Steven Sim

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Publish date: Thu, 30 Nov 2023, 08:49 AM
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TheEdge CEO Morning Brief

KUALA LUMPUR (Nov 29): As of Jan 1, 2023, 94,827 or 35% of Employees Provident Fund (EPF) members who are aged 54 years old have savings below RM10,000, with a total of RM246.1 million.

In contrast, only 2% or 4,877 members in the same age group have savings exceeding RM1 million, according to Deputy Finance Minister II Steven Sim.

The age group makes up 274,715 or 1.7% of 15.7 million EPF members, who collectively have savings amounting to RM35.72 billion, said Sim when answering a query from Datuk Seri Dr Dzulkefly Ahmad (Pakatan Harapan-Kuala Selangor) during an oral question-and-answer session in the Dewan Rakyat on Wednesday.

The Accounts 1 and 2 of EPF members who turn 55 years old will be consolidated into an Akaun 55, from which they will be allowed to withdraw all or part of their savings at the age of 55, while contributions from those who continue working will be credited into an Akaun Emas, which can only be withdrawn when they turn 60 years old.

To empower retirement savings, Sim pointed out that the government had implemented various measures, including providing various channels to make it easier for members to contribute to the EPF.

"Employees may voluntarily contribute to the EPF at a rate exceeding the statutory rate of 11%, and up to the first half of this year, a total of 186,000 members had chosen to contribute exceeding the statutory rate," said Sim.

Additionally, Sim said that the voluntary contribution programme allows members to contribute to the EPF at any time, with a maximum limit of accumulated voluntary contributions up to RM100,000 per year. As of the first half of this year, a total of 535,000 members had voluntarily contributed, amounting to RM3.93 billion.

Sim added that starting in 2024, the i-Sayang programme will be expanded to include husbands, giving working wives the option to allocate 2% of their monthly EPF contributions (the employee's portion) to their husbands' EPF accounts.

"In Budget 2024, the EPF will also improve the i-Saraan initiative. The government will increase its matching contribution limit for i-Saraan from the current RM300 to RM500 per year, capped at RM5,000 for life," said Sim.

Sim stated that the government is aware that insufficient retirement savings are a structural problem in the economy, thus the government had implemented the Madani Economy Framework to improve industrial competency and, at the same time, enhance wages and salaries of the rakyat.

Details of EPF's flexible account next year

Meanwhile, Sim mentioned that details of the EPF's flexible account will be announced next year, after the announcement of the EPF's dividends, which is likely in February.

Answering a supplementary question from Dr Abdul Ghani Ahmad (Perikatan Nasional-Jerlun), Sim stated that the aim of the flexible account is to assist EPF members with withdrawals during emergencies, whether they are from the bottom 40%, middle 40% or top 20% income groups.

"This step is taken to address current challenges, and is part of a comprehensive strategy. We are not just focusing on Account 3 (the flexible account). The EPF is also planning to empower Account 1 to ensure that basic savings are sufficient for retirement," Sim added.

In October, when tabling Budget 2024 in the Dewan Rakyat, Prime Minister Datuk Seri Anwar Ibrahim announced that the government would introduce a flexible account for EPF contributors, allowing them to access funds at any time.

The new account is being introduced as part of efforts to restructure EPF accounts and empower retirement savings, said Anwar.

The EPF currently has two accounts, namely Account 1, which cannot be accessed until retirement, and Account 2, where funds can be withdrawn for purposes such as education or housing payment.

For more Parliament stories, click here.

Source: TheEdge - 30 Nov 2023

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