KUALA LUMPUR: Only 27 per cent of Employees Provident Fund (EPF) members, aged between 18 and 55, are estimated to have sufficient savings in account 1 based on its basic savings quantum, the Dewan Rakyat was told today.
Deputy Finance Minister I Mohd Shahar Abdullah said the data from the current statistics revealed a drop in the number of active members who meet the basic savings quantum threshold, compared with 36 per cent as of Dec 31 last year, prior to the i-Sinar and i-Citra schemes.
"This is alarming as majority of EPF members may not have sufficient fund to cover their expenses throughout retirement.
"To address this, the government has decided that new contributions would be credited fully into the members' account 1 first until the amount withdrawn (through the schemes) are replenished," he said in reply to a supplementary question from Datuk Che Abdullah Mat Nawi (Pas-Tumpat).
Subsequently, contributions would follow the designated 70 per cent savings for account 1 and remaining 30 per cent for account 2, Mohd Shahar said.
The EPF Basic Savings quantum is revised periodically according to the minimum pension for public sector employees, or every three years, whichever is earlier, and in view of the escalating cost of living, longer life expectancy and higher inflation rate.
EPF has from Jan 1, 2019 followed new basic savings quantum for its members from RM228,000 to RM240,000 benchmarked against the minimum pension for public sector employees, which was raised from RM950 to RM1,000 per month.
According to the EPF table of basic savings quantum, members aged 30, for instance, should have at least RM30,000 savings, those aged 40 should already have at least RM86,000 and members should have at least RM175,000 by the age of 50.
Mohamad Sahar earlier said EPF had carried out several measures to ensure sufficient retirement savings among members, including flexible withdrawal, whereby those aged 55 and 60 could opt for either lump sum, monthly (periodical), dividend or any amount.
"This will allow members to maintain their savings longer. The mandatory contribution age is extended up to 75 (with employers also contributing) if the members are still working.
"To encourage members to remain active and employers to hire those aged 60 and above, EPF will not implement contributions on employees while employers are only required to contribute four per cent (of the member's salary)."
Other initiatives are i-Suri, i-Saraan, soon-to-be-introduced insurance scheme for chronic illnesses and death; free finance planning and savings consultation through Retirement Advisory Service (RAS) and Belanjawanku programme that helps guide members to plan their monthly budget, he added.
EPF has about 15.1 million members, of whom about 7.6 million are active.