KUALA LUMPUR – The Employees Provident Fund (EPF) has been working towards establishing a more pension-like approach towards providing its members with a more stable income in their post-retirement years.
The EPF said this could be 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 today.
The EPF nevertheless 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the members’ savings, up to a certain limit, will be converted into a monthly income and the remaining portion can be withdrawn lump-sum, is needed to prevent old-age poverty and for consumption smoothing during retirement.
“The EPF is 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.
“The EPF will communicate any relevant changes to its policy to affected members well in advance of the changes taking effect,” it said. – Bernama, July 6, 2023
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