THE Employees Provident Fund (EPF) is now focusing on assisting its members to rebuild their savings for their future retirement, following the special withdrawal facilities that were made available to help members deal with the Covid-19 health and economic crisis.

In a statement, the retirement savings fund said the withdrawal facilities were exceptional in nature and were introduced when the pandemic had severely impacted the local economy.

“These withdrawals, namely i-Lestari, i-Sinar and i-Citra, resulted in RM101 billion being disbursed to more than 7.4 million members, which is close to half of the total number of EPF members. 

“While they provided some financial relief to members during the pandemic and various movement-control orders, the withdrawals have inevitably led to 6.1 million members now having less than RM10,000 in their EPF accounts.

“A total of 3.6 million members have less than RM1,000, leaving them vulnerable and unprotected for their retirement,” it said. 

EPF said the drop in savings is particularly worrying for Bumiputera members as they accounted for 78% of the withdrawal applicants. 

As a result, 4.4 million or 54% of Bumiputera members now have less than RM10,000, and two million or 25% have less than RM1,000 in their EPF account.

It noted that the distribution of savings became increasingly skewed, where the bottom 40% of EPF members (about 5.0 million members) saw their savings declining by 38% to just RM8 billion, translating into a median savings balance of RM1,005. 

The middle 40% also saw their savings reduced by 18% to RM155 billion, or a median balance of RM24,995. 

Only the top 20% of members aged below 55 saw an increase in savings, but this translates into a median of RM152,043, or equivalent to just RM633 per month for 20 years.

“The withdrawal facilities have left 73% or nearly three-quarters of members in a serious state of having inadequate funds to retire above the poverty line,” it said. 

The EPF estimated that members will need to work an extra four to six years to recoup the savings that were utilised during the pandemic.

It highlighted that the percentage of members meeting the basic savings threshold (RM240,000 at age 55) had dropped significantly, from 36% in 2020 to an estimated 27% by the end of this year.

As such, future withdrawals due to exceptional circumstances will need to be very carefully considered to safeguard members’ future and rebuild their retirement funds. 

“With the measures put in place to support the economic recovery and spur employment, the EPF hopes that this will go some way towards addressing the needs of the people,” it said. 

The EPF noted that the recently tabled Budget 2022 includes an allocation of RM8.2 billion for Bantuan Keluarga Malaysia (BKM) and RM4.8 billion for the Jamin Kerja Keluarga Malaysia (JaminKerja) initiative.

Budget 2022 also includes a number of measures to assist the people, demonstrating the government’s strong stance in strengthening the social protection agenda for Malaysians.

This can also be seen particularly in the continuation of i-Saraan and Kasih Suri Keluarga Malaysia incentives, said EPF. 

It also said these efforts go some way towards addressing the shortcomings of the country’s social protection system for the vulnerable members of society, ensuring that they have access to at least a minimum standard of living, even during unprecedented times.

“The social protection agenda is being overseen by the Malaysian Social Protection Council, chaired by Prime Minister Datuk Seri Ismail Sabri Yaakob, and is currently looking at fundamental reforms to the nation’s social protection system,” it said. 

“The EPF fully supports these moves and will work closely together with the government to ensure a secure and protected future for our members and the people.” – Bernama, October 31, 2021.