81% of EPF Members Live Below Poverty Level After Retiring?

Currently, 81 percent of Employees Provident Fund (EPF) contributors will not have enough savings to live above the poverty line in their retirement.

Prime Minister and Finance Minister revealed that as of December 2022, only 19 percent of EPF contributors have reached the basic savings level. This is based on their age to enable them to have RM240,000 in savings by the age of 55. About 81 percent of contributors aged 55 and below are in a serious situation where their savings will not be enough for them to retire above the poverty level.

The PM said more than half (56 percent) of those who will be able to withdraw their EPF savings fully in a year – those who are 54 years old now – have RM50,000 or below in their retirement fund. About 81% EPF members cannot live above poverty level after retiring. If you have RM50,000, this can only provide retirement income of about RM208 a month for a period of 20 years.

As of Dec 31, 2022, more than 51 percent of the 13.1 million contributors below 55 years old have RM10,000 and below in their EPF funds. Of this amount, 26 percent are 40 years old and above, meaning those who can withdraw their retirement savings within 15 years. For this group, their EPF savings will only give them a retirement income of less than RM42 a month over a period of 20 years.

In his tabling of Budget 2023, the PM announced a plan that would allow contributors who are in dire straits to take up loans from a bank with collateral from their EPF. The loan scheme will not involve direct withdrawals from the contributors’ savings.

Having said that, the PM is not addressing the real issue - current or immediate requirements of contributors and their longer-term needs. If EPF is not used as collateral, then banks are going to be reluctant to lend. The Government needs a separate scheme/fund for this purpose. It can be like a “CGC” guarantee scheme but for personal loans. EPF should remain a retirement fund not a mortgage institution.

Reference: 

81pct EPF members cannot live above poverty level after retiring, Malaysiakini, 

11 April 2023