WHILE there is a need for the Employees’ Provident Fund (EPF) withdrawal policy to be changed to support the current retirement age of 60, it should be flexible for all contributors, financial planners and economic experts said.

They urged the government to adopt a “soft landing” approach instead of a “one-size-fits-all” policy.  

They were referring to the Malaysian Employers Federation’s (MEF) call to review the existing policy. Currently, members who reach the age of 50 are permitted to withdraw one third of their savings while those who reach 55 could withdraw it all.  

The retirement age, however, had been increased to 60 since July 2013. 

MEF said many EPF contributors did not have enough retirement savings to retire at 60. 

Economist Koong Lin Loong told The Malaysian Insight the withdrawal policy should be changed to ensure contributors had savings when they hit 60. 

“The withdrawal policy should be changed to allow three withdrawals. That is, some savings can be withdrawn at 50, then some at 55, and all savings can be withdrawn at 60,” he said. 

He, however, said EPF savings alone could not sustain life after retirement. This was due to the low salaries of some members and their lack of financial planning. 

Malaysian Financial Planning Council deputy president Desmond Chong Kok Fei said changes to the existing withdrawal policy could adversely impact the plans of EPF contributors. 

“Everyone has their own plans. Some may plan to retire to pay off their loans and educate their children. If the government suddenly says it wants to delay the full withdrawal, it will disrupt many people’s plans. 

“If the policy is implemented separately for different age groups, the situation is different. 

“For example, changing the withdrawal age to 60 for those who have just started working, that is more likely to be accepted,” he said. 

Chong said if a member is 53 years’ old and was expected to retire and withdraw the full amount in two years, the proposed change would force them to wait another seven years.

“That gap will be huge, but on the contrary, if a member is only 25 years’ old this year, do you think there is a difference between 55 and 60? There is not much difference,” he said. 

Chong believes the matter must be viewed from the perspective of EPF contributors, and that fund should organise awareness campaigns to help most people understand that existing savings are not enough for retirement. 

“The EPF should put forward data through awareness campaigns to make members understand. In short, before a policy is implemented, it must be viewed from multiple levels, and it must go through the stages of investigation, research, and persuasion of the people.” 

Sad situation 

Nicholas Chu, a licensed financial planner, said judging from the current situation, members’ retirement savings were insufficient and could be exhausted within three to five years. 

He said delaying full withdrawals would indeed give members some protection. 

He also suggested an “age split” for EPF withdrawals.  

“If everyone has to be 60 to withdraw the full amount, it is very unfair to some people. I suggest that retirees over the age of 50 decide whether to withdraw the full amount or continue to deposit it in EPF. After all, not everyone is financially inept and immature. 

“However, B40 members with insufficient savings should not be allowed to withdraw their deposits before the age of 60. This arrangement is more appropriate,” he said. 

He added that financial management was important. 

“When we were young, our parents helped us with our financial management. When we grow up, we still need the government to take care of us in our 50s. This is a sad phenomenon. 

“That is to say, people in their 50s have not learned how to manage their own money,” Chu said.  

He believed that from a macro point of view, a mature country should move towards independent management, with the government serving to guide and assist people in having better retirement security rather than acting like a “parent”. – April 18, 2023.