KUALA LUMPUR: The Employees Provident Fund (EPF) has raised the basic retirement savings benchmark to RM390,000, an increase from the previous guidance of RM240,000.
The retirement age benchmark has also been raised from 55 previously to 60.
This was revealed at the launch of the EPF's Retirement Income Adequacy (RIA) framework and Belanjawanku 2024/2025 today.
The RIA framework which will come into force in 2026, focuses on the concept of both savings and retirement income security.
The RIA will have a three-tier savings framework anchored on the adequate retirement income as determined by Belanjawanku from time to time.
The Belanjawanku guide was developed by the EPF and the Social Wellbeing Research Centre which estimates the minimum monthly expenses needed for a decent living standard.
Initially focused on the Klang Valley, the guide now covers 11 other major cities in Malaysia.
According to the RIA, based on current prices, a retiree at 60 will need RM390,000 to covering essential retirement needs; RM650,000 for a reasonable standard of living and RM1.3 million for greater financial security and independence for a higher quality of life.
The framework will kick off in 2026, but changes to policies anchored on the new RIA framework will take effect gradually over a three year period.
The basic savings amount will increase gradually by RM50,000 annually over three years, to reach the basic savings target of RM390,000 by 2028.
This is to manage the Members' Investment Scheme (MIS), which allows members to transfer 30 per cent of savings above the basic savings amount in Akaun Persaraan.
Additionally the withdrawal policy for savings above RM1 million will align with the enhanced savings benchmark of RM1.3 million, offering members flexibility in managing their surplus funds. Like basic savings level transition, the threshold for this withdrawal will increase gradually by RM100,000 annually over three years.
This means that in 2026, a member with more than RM1.1 million, will be able to withdraw any excess.
To remain relevant to rising costs, the RIA savings levels will be reviewed every three years, starting in 2029, using updated data from the Belanjawanku findings.
"The Belanjawanku guide and RIA framework are cornerstones to EPF's purpose in building a better retirement future for all Malaysians. The guide helps average Malaysians navigate the challenges in managing household expenses while the EPF establishes a strong foundation for building adequate retirement savings, EPF chief executive officer Ahmad Zulqarnain Onn said in a statement.