KUALA LUMPUR: A total of 2.65 million, or 36.2 percent, of the 7.33 million active formal members of the Employees Provident Fund (EPF) aged 18 to 55 have achieved the basic savings according to age as of October 30, 2024, according to the Ministry of Finance (MoF).

According to BERNAMA News Agency, this figure marks an increase from 2.21 million, or 30.4 percent, of the 7.25 million active formal members as of December 2022. The ministry attributes the insufficiency of retirement savings to factors such as low salary structures and the misalignment between the eligible withdrawal age of 55 and Malaysia’s retirement age.

Additionally, the Ministry of Finance noted that inconsistent contributions and low levels of financial literacy among Malaysians contribute to a lack of awareness regarding the importance of financial and retirement planning, which in turn leads to insufficient savings. This statement was made in a written reply on the Parliament website, responding to a query from Datuk Seri Hishammuddin
Tun Hussein (BN-Sembrong) about projections for Malaysians’ financial preparedness for retirement.

The ministry explained that basic savings refer to the amount in the Retirement Account set by EPF to ensure that members have at least RM240,000 in savings by the age of 55. This amount allows members to receive a minimum of RM1,000 per month during the first year of retirement.

Due to the compounding effect of annual dividends, the monthly retirement income withdrawals increase over the years. “As a result of the compounding effect of the annual dividends, the monthly withdrawal is estimated to increase up to RM2,728 by the age of 75, based on the expected average life expectancy of Malaysians. Therefore, the average monthly withdrawal over the entire period from age 55 to 75 (for 20 years) is estimated to be RM1,697 per month,” the ministry stated.