THE Employees Provident Fund (EPF) has refuted speculations of an impending cash crisis as well as an amendment to the EPF Act 1991 to prevent retirees from withdrawing their savings. 

In a statement, the retirement savings fund said it has always maintained sufficient liquidity to meet all obligations.  

It said the sale and purchase of overseas assets are a normal part of the EPF’s investment operations, stressing that the move was not for the payment of 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,” it said. 

The EPF issued a statement to refute the speculations circulating via WhatsApp that referred to an article titled “Bank Negara says Malaysians could run out of savings 19 years too soon” published by an international daily on April 7.  

“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,” it said. 

According to BNM, the median savings for the 51-55 age group would only last five years upon withdrawal at 55, and that has dropped to around three years after the pandemic-related withdrawals. 

“The report further states that average Malaysians 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,” it said. 

Additionally, millennials in the 26-40 age group are likely to face significant financial challenges, as many of them are struggling to meet the EPF’s basic savings threshold of RM240,000. 

“The special pandemic-related withdrawals have also resulted in significant reductions in the amount of retirement savings for the members involved,” the EPF said.  

As of March 2023, 70.5% out of the 7.2 million active members aged 18-55 did not meet the EPF’s basic savings threshold, while 3.1 million or 39% of members who made special withdrawals and are below the age of 55 as of January 2023 have not started rebuilding their savings. 

As such, their savings levels remain critically low with a median savings of RM890, said EPF. 

“Our 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 and the government are also discussing other areas of reform that may be useful in addressing the currently poor state of retirement adequacy that has been further exposed by the pandemic,” it said.  

The retirement fund also advised its members to only trust communications from official sources, and social media speculations. – Bernama, April 12, 2023.