KWASA DAMANSARA, 12 April 2023: The Employees Provident Fund (EPF) strongly refutes the speculation circulating via WhatsApp claiming that there is a cash crunch crisis building up in the EPF and that it does not have enough money to pay for further premature withdrawals.

The EPF has always maintained sufficient liquidity to meet all its obligations. The sale and purchase of overseas assets is a normal part of the EPF’s investment operations as part of its asset allocation strategy, and not to pay for premature withdrawals. In fact, there has been a slow but steady increase in the EPF’s overall foreign exposure over the years, even during the COVID-19 crisis. Additionally, there is no truth to the speculation that the EPF Act 1991 will be amended to prevent retirees from withdrawing their savings.

The speculation referred to a newspaper article by Business Times Singapore dated 7 April 2023 and titled "Bank Negara says Malaysians could run out of savings 19 years too soon." What Bank Negara Malaysia (BNM) has highlighted is the dire situation for retirees, even before the pandemic, due to structural issues such as low wages. The median savings for the 51-55 age group would have only lasted five years upon withdrawal at 55, and that has dropped to around three years after the pandemic-related withdrawals. The report further states that an average Malaysian would be at risk of depleting their retirement savings 19 years before death, with global life expectancy rising to above 77 years old by 2050. Millennials in the age group of 26-40 years old are likely to face significant financial challenges, as many of them are struggling to meet the EPF’s Basic Savings threshold of RM240,000. This shortfall could result in potential foregone savings of up to RM94,000 when they retire at 60, making them one of the most affected demographic groups.

The special pandemic-related withdrawals have also resulted in significant reductions in the amount of retirement savings for the members involved. As at March 2023, a total of 70.5% out of the 7.2 million active formal sector members aged 18-55 years do not meet the EPF’s Basic Savings threshold by age. A total of 3.1 million or 39% of members who made special withdrawals and are below age 55 years as of January 2023 have not started rebuilding their savings. Their savings levels remain critically low, with a median savings of RM890.  The EPF’s primary concern in this matter is to prioritise the rebuilding of retirement savings and to extend coverage to those who fall outside the current scope of the EPF Act 1991. The EPF is also discussing with the Government further areas of reform that may be useful in addressing the currently poor state of retirement adequacy that has been further exposed by the pandemic. The EPF would like to advise our members to only trust communications from official sources, and not speculation over social media.

Issued by EPF Media Desk
Corporate Affairs Department
12 April 2023