EPF WORKING TOWARDS ENSURING RETIREMENT INCOME ADEQUACY
KWASA DAMANSARA, 6 July 2023: The Employees Provident Fund (EPF) wishes to clarify news reports on the consideration to introduce a monthly drawdown option for EPF members. The EPF has been working towards establishing a more pension-like approach towards providing members with a more stable income in their post-retirement years.
This can 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 transition.
The proposed changes will most likely require a generational change and the conversion will take time. 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 EPF will continue to encourage its members to voluntarily convert to the monthly drawdown option.
The monthly drawdown, where a portion of the member’s savings, up to a certain limit, will be converted into a monthly income and the remaining portion can be withdrawn lump-sum, is needed to prevent old-age poverty and for consumption smoothing during retirement.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.
Issued by the EPF Media Desk
Corporate Affairs Department
6 July 2023
About the Employees Provident Fund (EPF)
The Employees Provident Fund® (“EPF®”) is one of the oldest retirement funds in the world. Established in 1951, the EPF® is a social-security organisation focused on safeguarding member savings and delivering excellent services. In recent years, in line with its vision of helping members achieve a better future, the EPF® has expanded its role to encompass the creation of a comprehensive social well-being ecosystem. Today, the EPF® remains steadfast in its commitment to members through consistent efforts to update and improve itself, in order to build the foundation for sustainable, holistic and equitable well-being for all Malaysians.