PRIOR to the Covid-19 special withdrawal schemes, about 3.3 million or 22% of Employees Provident Fund (EPF) members were able to meet the basic savings target.
Following the withdrawal schemes, this number had dropped to 2.3 million or 14.9% of all EPF members, as at July 2022.
As of the same period, about half or 51.7% of the total 12.78 million EPF members aged below 55 years old have minimal retirement savings of less than RM10,000.
Individuals who needed to withdraw from the special schemes are those with the least amount of savings, said the EPF.
Those approaching retirement age may not be able to accumulate adequate savings for retirement during their remaining working years.
So should the retirement age be further extended?
About RM145bil had been withdrawn from the four Covid-19 special schemes – i-Lestari, i-Sinar, i-Citra and the one-off withdrawal of RM10,000.
Basic savings refer to the amount that is considered sufficient to support members’ basic needs for 20 years upon retirement.
It is benchmarked against the minimum pension for public sector employees, which is RM1,000 per month.
This rate of RM1,000 can only cover basic needs and is lower than the estimated minimum monthly expenses of RM2,500 required for a senior citizen to lead a reasonable standard of living, as recommended in the Belanjawanku Guide.,
This translates into an adequate savings target of about RM600,000 to last for 20 years of retirement, said the EPF.
As of July 2022, only about 15.6% of active members in the 25 to 29 age category are able to meet basic savings; 30 to 34 (34.4%), 35 to 39 (43.6%), 40 to 44 (44.9%), 45 to 49 (41.4%) and 50-plus (33.2%).
Overall, only 28.3% of active members are able to meet basic savings over the same period.
In its focus on financial literacy, the EPF will highlight, among other things:
> My Money Matters as a basic guide to financial planning which helps members to be aware of their financial position throughout their life cycles.
They need to organise, among other things, their savings goals on a short to long term basis, how to plan their expenditure and investments while assessing the value of their assets and keeping aside money for retirement.
> The Belanjawan Guide which provides the recommended minimum level of monthly expenses for households in Malaysia.
It is comprehensive; in recommending the appropriate budget, it takes into account the household composition, the city of residence and the person’s commitments.
> Retirement advisory services on a one-to-one basis which are given free of charge by certified officers to help members plan their retirement finances as well as in their personal financial planning.
To encourage higher savings, salaried employees who are currently EPF members can voluntarily contribute at a rate that is higher than the statutory rate.,
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