81pct EPF members cannot live above poverty level after retiring

 

Currently, 81 percent of Employees Provident Fund (EPF) contributors will not have enough savings to live above the poverty line in their retirement.

Prime Minister and Finance Minister Anwar Ibrahim revealed that as of December last year, only 19 percent of EPF contributors have reached the basic savings level based on their age to enable them to have RM240,000 in savings by the age of 55.

“This directly shows that 81 percent of contributors aged 55 and below are in a serious situation where their savings will not be enough for them to retire above the poverty level,” Anwar said in a written parliamentary reply.

He was answering a query from Gombak MP Amirudin Shari who had asked for a breakdown of EPF contributors based on their latest savings and how many do not have enough for their retirement.

Anwar said more than half (56 percent) of those who will be able to withdraw their EPF savings fully in a year – those who are 54 years old now – have RM50,000 or below in their retirement fund.

“RM50,000 can only provide retirement income of about RM208 a month for a period of 20 years,” he said.

Prime Minister and Finance Minister Anwar Ibrahim

As of Dec 31, 2022, more than 51 percent of the 13.1 million contributors below 55 years old have RM10,000 and below in their EPF funds.

Of this amount, 26 percent are 40 years old and above, meaning those who can withdraw their retirement savings within 15 years.

“For this group, their EPF savings will only give them a retirement income of less than RM42 a month over a period of 20 years,” Anwar said.

He also provided the breakdown of those who have RM10,000 and below as well as those who have more than RM10,000 in their EPF accounts, according to age groups.

In his tabling of Budget 2023 last month, Anwar announced a plan that would allow contributors who are in dire straits to take up loans from a bank with collateral from their EPF.

This was in response to calls for the government to allow another round of EPF withdrawal, following the four previous rounds under former administrations.

The loan scheme will not involve direct withdrawals from the contributors’ savings. - Mkini