EPF: Gens Y, Z must diversify investments to avert risky retirement

Malaysians, particularly those between the ages of 16-35, should consider diversifying their investments and savings to avoid having insufficient retirement funds.

According to statistics provided by the Employees Provident Fund (EPF), 64 per cent of its members aged 54 had less than RM50,000 in their retirement account, which would only last four years beyond their retirement at the rate of RM950 a month for expenses.

Given this rather alarming situation, the EPF is urging Generations Y (21-35 years) and Z (16-20 years), who constitute more than 50 per cent of members, to reflect on their retirement plan, and is as such aggressively promoting its Retirement Advisory Service (RAS) to advise and help them protect savings.

EPF Petaling Jaya RAS Advisor, Mogana Murugan said the majority of members had insufficient savings to sustain lifestyles upon retirement.

"Based on the quantum savings base issued by the EPF, the minimum amount in base deposit is the predetermined amount set by age in the Account 1.

“The basic savings amount is set according to age, where members should have at least RM228,000 (or RM950 for monthly expenses for 20 years) in their EPF account by age 55," she told media during a briefing on the RAS.

She said only 21 percent or 2.9 million members had sufficient basic savings based on their age, and contributors were encouraged to engage with financial consultants in considering various investments, and not just depend on the pension fund.

Mogana also said most members aged beyond 55, opt for lump-sum withdrawals and would have fully utilised their savings within three to five years.

"There are cases where individuals spent all the savings at once, and ended up having to live the rest of their lives in poverty," she added.

She said the EPF offered five withdrawal options for contributors aged 55 and above, namely a lump-sum withdrawal, monthly withdrawal, partial withdrawal, a combination of monthly and partial withdrawal, or withdrawal of annual dividends or monthly dividends.

These options are aimed at helping contributors plan their finances and sustain lifestyles upon retirement.

According to Mogana, business owners can also top-up their EPF savings on a voluntary basis, while employees can opt to increase their contribution rate.

“This extra effort by contributors can prevent them from suffering later, as statistics revealed that 85 per cent of Malaysians regretted not saving up for retirement,” she said.

- Bernama