After much debate and protest, the Prime Minister Datuk Seri Najib Tun Razak has announced that Employees Provident Fund (EPF) members would retain their right to withdraw their savings at the age of 55.
However, all contributions made to EPF after the age of 55 will be locked in until they turn 60.
This decision was lauded by many, as EPF members have overwhelmingly voted for this option in the online consultation process initiated by EPF.
This announcement was made by Datuk Seri Najib in his keynote address at Invest Malaysia 2015.
He also stressed that he was aware of public concerns about any changes to the EPF in the future.
“In just two days of the consultation process, more than 50,000 Malaysians have taken part and given their views. It is already the largest ever public consultation carried out,” he added.
“It’s clear the vast majority of EPF members, while understanding the importance of retirement savings at the age of 60, want the right to use their retirement fund at the age of 55.
“I want to assure the public that EPF members will retain their right to withdraw at the age of 55.”
Najib also said in this speech that EPF would ensure that any new changes in the future would only apply to new contributors, and not to members who decided to work beyond the age of 55.
“This strikes a fair balance between the rakyat’s expectation to their hard-earned money at the age of 55 while protecting them if they retire at the age of 60,” he added.
Najib also announced that EPF had embarked on an initiative to offer syariah-compliant investment options for members from 2017.
“This will create the largest syariah fund of its kind in the world and will further strengthen Malaysia’s position as a leading Islamic financial centre,” he added.
As a reassurance to its members, EPF’s deputy chief executive officer (strategy division) Tunku Alizakri Raja Muhammad Alias said all remaining withdrawal schemes, including one-third withdrawals at 50 and for housing, would not be changed.
“Under the proposals, EPF had only sought members’ input for changes to the age of full withdrawals. It is status quo for all other existing withdrawal schemes,” he said.
According to Alizakri, members could continue to make full, partial or flexi withdrawals at 55 and any changes were essentially on their new contributions from age 55+1 until 60.
With the new changes, EPF members above the age of 55 who are still employed could no longer make withdrawals every month.
Tunku Alizakri, however, said it would take some time before the changes kicked in.
On EPF’s consultation exercise, he said it would continue until May 5.
“The findings need to be presented to the board before the process to make the changes, as announced by the Prime Minister, can start,” he said.
Datuk Shahril Ridza, chief executive officer of EPF, urged EPF members to continue with their response to the survey, which includes proposals for other initiatives.
“We want to make sure our members’ voices are heard on matters that have direct bearing on their retirement savings,” he said.