The Finance Ministry reports that over two million EPF members have successfully saved a basic amount

According to the Finance Ministry, as of October 30, 2024, 2.65 million, or 36.2%, of the 7.33 million active formal members of the Employees Provident Fund (EPF) who are between the ages of 18 and 55 had attained the basic savings according to age.

According to the government, this number is higher than the 2.21 million, or 30.4%, of the 7.25 million active official members as of December 2022.

Low pay structures and the fact that the 55-year-old eligible withdrawal age does not match Malaysia’s retirement age are to blame for the insufficient retirement savings.

On Thursday (Dec. 5), the MoF posted a written response on the Parliament website, stating that “in addition, inconsistent contributions and the low level of financial literacy among Malaysians result in a lack of awareness of the importance of financial and retirement planning, which contributes to insufficient savings.”

Datuk Seri Hishammuddin Hussein (BN-Sembrong) posed a query about the expected level of retirement financial readiness among Malaysians.

The ministry refers to the amount in the retirement account that EPF sets aside as the “basic savings” to ensure that members have at least RM240,000 saved by the time they are 55.

In the first year of retirement, members can receive a minimum of RM1,000 per month thanks to their basic savings. Nonetheless, the value of monthly withdrawals from retirement income rises over time as a result of the annual payouts’ compounding effect.

Based on the anticipated average life expectancy of Malaysians, the monthly withdrawal is projected to rise to RM2,728 at the age of 75 due to the compounding effect of the annual dividends.

Therefore, we estimate that the average monthly withdrawal during the 20-year period from age 55 to 75 would be RM1,697.