The low starting salary for those who started their career before the minimum wage was implemented in 2013, is one of several factors contributing to the low amount of savings for the 40 to 54-year-old group who have a balance of less than RM10,000.
The Employees’ Provident Fund (EPF) in a statement in Kuala Lumpur today (March 9) informed that, in addition to that, another factor that also contributed to the matter was the challenge of the salary structure, with 44% of EPPF contributors having an income of less than RM2,000 and 81% having an income of less than RM5,000.
“The inconsistent contributions are due to members moving in and out of the formal sector, where only 45% of the 4.81 million members in this age group, have made contributions in 2022 while the rest did not make any contributions last year.
“Only half of the private sector workforce who are under formal employment contracts, are required to make contributions to the EPF. The remaining workforce consists of individuals in other sectors such as agriculture, informal employment, contract workers or business owners,” according to the statement.
In addition, the EPF informed that 2.85 million or 59% of members from the age group in question, have applied for more than one withdrawal related to Covid-19 and withdrawn as much as RM62 billion, further reducing their total savings.
As of the end of December 2022, there are a total of 4.81 million EPF members between the ages of 40 and 54, of which 2.17 million are active members and 2.64 million are inactive members (defined as not making any contributions in the past year).
The EPF meanwhile welcomes the government’s one-off contribution of RM500 to active and inactive members, as a measure to increase members’ retirement savings.
“The incentive will be a catalyst for rebuilding members’ savings, to achieve a more comfortable retirement and further help reduce the impact of the rapid development of Malaysia’s aging population,” according to the statement.
Prime Minister Anwar Ibrahim when presenting Budget 2023 on 24 February said the government agreed to increase the EPF account 1 savings contribution of RM500 for members aged 40 to 54, who have less than RM10,000 in savings.
