A TOTAL of 2.65 million or 36.2% of the 7.33 million active formal members of the Employees Provident Fund (EPF) aged 18 to 55 have achieved basic savings according to age as of Oct 30, 2024, according to the Finance Ministry.
The ministry said that this figure represents an increase from 2.21 million or 30.4 per cent of the 7.25 million active formal members as of December 2022, reported Bernama.
The insufficiency of retirement savings is due to several factors, such as low salary structures and that the eligible withdrawal age of 55 is not aligned with Malaysia's retirement age.
"Additionally, inconsistent contributions and the low level of financial literacy among Malaysians result in a lack of awareness on the importance of financial and retirement planning, which contributes to insufficient savings,” the MoF said in a written reply on the Parliament website on Thursday (Dec 5).
It was responding to a question from Datuk Seri Hishammuddin Hussein (BN-Sembrong) regarding the projections for Malaysians' financial preparedness for retirement.
According to the ministry, the basic savings refer to the amount in the Retirement Account set by EPF to ensure that members have at least RM240,000 in savings by the age of 55.
These basic savings allow members to receive a minimum of RM1,000 per month in the first year of retirement. However, due to the compounding effect of annual dividends, the value of monthly retirement income withdrawals increases over the years.
"As a result of the compounding effect of the annual dividends, the monthly withdrawal is estimated to increase up to RM2,728 by the age of 75, based on the expected average life expectancy of Malaysians.
"Therefore, the average monthly withdrawal over the entire period from age 55 to 75 (for 20 years) is estimated to be RM1,697 per month," it said. - December 6, 2024
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