KUALA LUMPUR: Two-thirds or 71 per cent of Employees Provident Fund (EPF) active contributors aged 55 and below do not have sufficient funds to elevate them above the poverty level.
Prime Minister Datuk Seri Anwar Ibrahim said this was due to the four special withdrawals approved during the Covid-19 pandemic.
Anwar, who is also Finance Minister, said the number of active members who had reached the basic savings target of RM240,000 by the age of 55 had dropped from 36 per cent in 2020 to 29 per cent at the end of last year.
"The EPF estimated that members are required to work between four and six extra years to rebuild the savings that were withdrawn during the pandemic," he said in a parliamentary written reply to a question from Datuk Seri Amirudin Shari (Pakatan Harapan - Gombak).
EPF had implemented the schemes, namely i-Lestari, i-Sinar, i-Citra and special withdrawal, to allow members aged 55 and below affected by the Covid-19 pandemic to dip into their savings.
Some 8.1 million EPF members or 62 per cent of the 13.1 million members opted for the withdrawals.
Anwar said any additional withdrawals would only worsen the already alarming lack of savings among EPF members.
In addition, any new withdrawal could also affect EPF's new investment opportunities and profit-generation for the purpose dividend payment to contributors in the future, he said.
"As of December 31 last year, a total 6.7 million contributors or 51 per cent of those aged under 55 have savings of less than RM10,000 following the withdrawals.
"With this amount, the members only have on average RM42 a month in retirement fund over 20 years."
He said the insufficient EPF savings requires attention as the nation was moving towards an ageing nation status. He said it could have huge implications on the country and people, especially on the economy, productivity, social wellbeing, quality of life and health.
Any new withdrawals, he said, would require EPF to provide cash flow to cover a huge amount, and take steps in portfolio balancing by taking into consideration cash holdings, liquidity and maturity while slowing down domestic investments.
He said the government was of the view that any EPF withdrawal, whether targeted or open in its implementation, was not the right long-term solution to resolve the financial burden faced by contributors.
The prime minister said the social security system should instead be strengthened to ensure Malaysians have enough protection in events such as loss of job and income.
"As a huge social security institution, EPF must cooperate with government agencies in building and strengthening a holistic and sustainable social security system for the wellbeing of Malaysians."