6.3 Million EPF Members Have Critically Low Savings
The Employee Provident Fund (EPF) has recently revealed improvements in the state of members’ savings. At the beginning of 2023, it was reported that up to 6.67 million EPF members have less than RM10,000 savings. Almost a year later, that number is now at 6.3 million members who have less than RM10,000 in EPF savings. While this is a slight improvement, the severity of the issue persists.
According to a post on the Parliament website on 20 November 2023, the ministry said the number of members with insufficient savings has risen dramatically since April 2020. At the time, it was recorded that 4.7 million members (37%) had inadequate savings, This was before the introduction of the special Covid-19 withdrawals.
“With savings of less than RM10,000, members are expected to have a retirement income of less than RM42 per month for a period of 20 years. The additional withdrawals from Account 1 also have a long-term effect, namely a significant reduction in retirement savings among EPF members”, it said in response to a question raised by Zulkifli Ismail (Perikatan Nasional-Jasin) on the government’s initiative to address the issue of insufficient retirement savings among the people, compounded by the large informal sector in Malaysia and a higher dependency ratio.
According to Bernama, the ministry is taking the issue seriously, especially due to the fact that Malaysia is currently facing growing issues with regards to an ageing population, which is expected to have a massive impact on the nation’s overall economy productivity, social welfare, quality of life and health.
The government announced in Budget 2024 an increase in the matching grant limit under the i-Saraan programme from RM300 to RM500 per year, subject to a maximum limit of RM5,000 for each eligible individual throughout their lifetime.
Interestingly enough, the EPF also recently reported that there was a 19.34 percent year-on-year increase in total investment income to RM14.67bil in the third quarter of the year after netting off write downs. Overall, there was an increase of 33 percent in terms of investment income over the period of January 2023 to September 2023 compared to the same period last year.