KUALA LUMPUR: The Employees' Provident Fund (EPF) has targeted to raise the retirement coverage in Malaysia, initially through voluntary measures, and eventually through legislative action.
The EPF chief executive officer Ahmad Zulqarnain Onn said the country is fast becoming an ageing society.
It is already at seven per cent (of the population aged 65 years and over) and by 2043, the country will be 14 per cent aged.
"In Malaysia, out of every 100 people, only 60 are covered by a formal retirement scheme. Of these, around 50 are under the EPF, and about 10 are covered by the civil service pension scheme. That leaves 40 people, largely from the informal sector, without any retirement coverage.
"They are not covered by retirement schemes, because generally they work in the informal sectors, or they are migrant workers, or they work on something called contract for service, as opposed to contract off service.
"Over time, we aim to increase coverage in Malaysia through voluntary measures and eventually, through legislative means. This is crucial, as we should be targeting 80 per cent to 90 per cent coverage as a country, rather than the current 60 per cent," he said on TV3's 'Money Matters' programme.
To encourage more Malaysians to register and open EPF accounts, Ahmad Zulqarnain said the fund currently offers numerous outreach programmes.
These include allowing voluntary contributions, running financial literacy initiatives and enhancing the i-Akaun app for better user experience.
"Today, we are allowing people as young as 14 years old to open an account with the EPF. So we do see parents starting to save for their children's retirement account as well, which is really interesting and this has been growing as a portion of our portfolio," he said.
He noted that around 12 per cent of monthly contributions now come from voluntary channels, compared to the previous 100 per cent from mandatory contributions.
Ahmad Zulqarnain said the 12 per cent is also growing year-on-year, showing that more people are starting to contribute voluntarily to the EPF.
He also said raising the allocation for Akaun Persaraan from 70 per cent to 75 per cent has improved the overall adequacy for members.