LOWER starting salaries for those who began their careers before the implementation of the minimum wage in 2013 is among the factors contributing to Employees’ Provident Fund (EPF) members aged between 40 and 54 years having less than RM10,000 in savings.

In a statement today, EPF said another factor was structural wage challenges, where 44% of EPF contributors earn less than RM2,000, while 81% have an income of less than RM5,000.

“Also, inconsistent contributions due to members shifting in and out of formal employment; where only 45% of the 4.81 million members in this age group made contributions in 2022, while the rest did not contribute at all last year.

“In addition, only half of the private sector labour force, who are under formal employment contracts, are mandated to contribute to the EPF and the remaining comprises individuals in other sectors, such as agriculture or informal work, or contract workers and business owners,” it said.

The other factor is that 59% of the 2.85 million members in this age group applied for Covid-19-related withdrawals and withdrew more than RM62 billion in total.

As of the end of December 2022, there were 4.81 million EPF members in the 40-54 age range. The fund said 2.17 million of whom were active members while 2.64 million are inactive members (defined as having made no contributions in the past year).

The EPF, meanwhile, welcomes the government’s move to provide a one-time RM500 contribution to both active and inactive members, to encourage more Malaysians to increase their retirement savings.

This incentive will serve as a catalyst for members to rebuild their savings and attain a dignified retirement, which in turn will help mitigate the impact of Malaysia’s rapidly aging population, it added.

Prime Minister Anwar Ibrahim, when re-tabling Budget 2023 on February 24, said the government had agreed to raise the EPF Account 1 contributions by RM500 for members aged between 40 and 54 years with less than RM10,000 in savings. – Bernama, March 9, 2023.