Proposed EPF monthly pension disbursement remains unaffected for current members, as per Hui Ying's statement
The Malaysian government has proposed a change to the Employees Provident Fund (EPF) that would restructure members' retirement savings into a two-tier system. The proposal is currently under review by the EPF and has not yet been implemented.
The new system would consist of a Flexible Savings account and an Income Savings account. Future EPF contributions would be split between these two components. The Flexible Savings portion would be accessible to members at any time, maintaining liquidity, while the Income Savings portion would be paid out gradually as periodic disbursements until fully depleted, providing a more stable and sustainable post-retirement income stream.
The goal of this proposal is to manage retirement savings in a more structured, fair, and sustainable way. It aims to help retirees receive steady income over time rather than relying solely on lump-sum withdrawals after retirement.
Under the proposed changes, new EPF members starting from the implementation date would be automatically enrolled in the new system. Existing members, however, can opt in voluntarily. It is important to note that the withdrawal rights of existing EPF members will remain unchanged.
The government is committed to gathering public feedback and conducting comprehensive engagement before implementing the changes. Any move to the new EPF structure would be voluntary.
Key details of the proposed system include:
- Flexible Savings Account: Portions of contributions accessible to members at any time, maintaining liquidity.
- Income Savings Account: Portion reserved to be disbursed as monthly or periodic payouts after retirement, ensuring steady income flow.
- Monthly Payout Option: The plan contemplates a pension-like monthly payout post-retirement instead of lump-sum withdrawals, aligning with global pension trends to provide consistent retirement income.
The government has emphasized ongoing stakeholder engagement and thorough evaluation to ensure the new system benefits members without undermining existing rights. The initiative is part of broader efforts under Malaysia’s 13th Malaysia Plan to strengthen long-term retirement financial security by reducing premature withdrawals and increasing financial sustainability for retirees.
In 2024, EPF delivered a dividend return of 6.3% for both conventional and shariah savings, demonstrating the retirement fund's significant performance and its delivery of among the highest dividend returns for government-linked investment institutions.
The consultation process with stakeholders is ongoing to ensure the long-term interests of EPF members are protected. The proposal is an initial one from the Madani government.
[1] The Edge Markets. (2021, October 28). EPF to restructure members' retirement savings into two-tier system. Retrieved from https://www.theedgemarkets.com/article/epf-restructure-members-retirement-savings-two-tier-system
[2] The Star. (2021, October 29). EPF to restructure members' retirement savings into two-tier system. Retrieved from https://www.thestar.com.my/business/business-news/2021/10/29/epf-to-restructure-members-retirement-savings-into-two-tier-system
[3] New Straits Times. (2021, October 28). EPF to restructure members' retirement savings into two-tier system. Retrieved from https://www.nst.com.my/business/2021/10/800840/epf-restructure-members-retirement-savings-two-tier-system
[4] Bernama. (2021, October 28). EPF to restructure members' retirement savings into two-tier system. Retrieved from https://www.bernama.com/en/business/news.php?id=1988839
[5] The Malaysian Reserve. (2021, October 28). EPF to restructure members' retirement savings into two-tier system. Retrieved from https://www.tmr.my/epf-to-restructure-members-retirement-savings-into-two-tier-system/
- The Malaysian government's proposal aims to transform the Employees Provident Fund (EPF) system, establishing a two-tier structure for members' retirement savings that includes a Flexible Savings account and an Income Savings account.
- This new system, currently under review by the EPF, will mandate future contributions to be split between the two accounts, with the Flexible Savings portion offering liquidity and the Income Savings portion providing a steady income stream after retirement.
- The proposed changes to the EPF, part of Malaysia's 13th Malaysia Plan, seek to enhance long-term retirement financial security by reducing premature withdrawals and increasing sustainability, while preserving existing members' withdrawal rights.
