The Employees Provident Fund said it has been working towards establishing a more pension-like approach towards providing its members with a more stable income in their post-retirement years. This is seen from its current encouragement to members to voluntarily shift to regular monthly payout rather than lump-sum withdrawals.
“In 2022, more than 7,000 members have already voluntarily adopted the monthly payout option. The process of formalising the proposed monthly withdrawal mechanism is still being studied and will take into account the ability and readiness of members to make such a transition.
“The proposed changes will most likely require a generational change and the conversion will take time,” it said in a statement yesterday.
The provident fund believes that such a transition is necessary given that Malaysia’s average life expectancy has increased from 54 years in 1957 to 75 years today, and is projected to further increase in the future, translating into longer years spent in retirement, the statement read.
“The EPF will continue to encourage its members to voluntarily convert to the monthly drawdown option,” it said.
It added that the monthly drawdown, where a portion of the member’s savings, up to a certain limit, will be converted into a monthly income and the remaining portion can be withdrawn lump-sum, is needed to prevent old-age poverty and for consumption smoothing during retirement.
“We are taking a pragmatic and practical approach to the proposed policy enhancement, balancing the needs of current members against the desirability of sustaining members’ savings after retirement.
However, a quick check among netizens, the proposal has received mixed responses as some view that members should be given an option rather than down a throat approach. As this will be a new concept unfamiliar to contributors who are used to waiting for retirement before withdrawing their savings, the monthly pension approach will need getting used too.
Some Malaysians view EPF as a form of savings that could be used for their lifelong dream use after retirement and still keep some aside for their old age spending.
The government should really consider implementing other safety nets for retirees like free healthcare, insurance benefits, and retirement allowances using funds from Petronas instead of from citizens’ own pockets.
