New Basic Savings Quantum Begins January 2017
KUALA LUMPUR, 30 September 2016: The Employees Provident Fund (EPF) today announces that the quantum for the Basic Savings will be revised from RM196,800 to RM228,000 effective 1 January 2017. The amount will be set as the minimum target EPF savings members should have when they reach age 55.
The Basic Savings refers to the amount that is considered sufficient to support members’ basic retirement needs for 20 years from age 55 to 75 aligned with the Malaysian life expectancy. The new quantum (refer to Table 1) is benchmarked against the minimum pension for public sector employees, which has been raised from RM820 to RM950 per month from age 55 to 75.
EPF Head of Corporate Affairs Department Nurini Kassim said, “The EPF Basic Savings quantum is revised periodically according to the minimum pension for public sector employees, or every three years, whichever is earlier, with the last revision having taken effect in 2014. In view of the escalating cost of living, longer life expectancy and higher inflation rate, the EPF has made the decision to revise the Basic Savings upwards to RM228,000 from RM196,800.
“Accordingly, members will now be required to have higher savings in their EPF account in order to be eligible to participate in the EPF Members Investment Scheme (EPF-MIS). The scheme provides members with an option to enhance their retirement savings through placing a portion of their EPF savings in Account 1 to be invested in unit trust funds or via private mandate managed by the appointed Fund Managers Institutions (FMI) under the EPF-MIS.”
Nurini added that the Basic Savings will be used as a guide for members to determine the amount permitted to be transferred for investment under the scheme.
Effective 1 January 2017, the eligible amount members will be allowed to invest under the EPF-MIS has been increased to up to 30 per cent in excess of their Basic Savings from Account 1, from the current 20 per cent.
“Before participating in the scheme, EPF members should read the prospectus and disclosure documents to fully understand the investment product and should consult professional financial advisors. Members with i-Akaun can also refer to the EPF-MIS Information Portal for details on unit trust funds offered under the scheme, as well as the FMIs managing these unit trust funds,” said Nurini.
About the Employees Provident Fund (EPF)
The Employees Provident Fund (EPF) is Malaysia’s premier retirement savings fund to help its members achieve adequate savings for a comfortable retirement. This is in line with EPF’s vision to help members achieve a better future and the mission to safeguard members’ savings and deliver excellent services. The EPF has evolved significantly from transaction-centric to a professional fund management organisation with a strong focus on retirement security. The EPF is guided by a robust and professional governance framework when making investment decisions. It continues to play a catalytic role in the nation’s economic growth and seeks to cultivate a savings and investment culture among its members to improve the country’s financial literacy level.