KUALA LUMPUR: More than 40 per cent of the country's workforce, particularly informal workers, are not covered by any formal retirement scheme.
The EPF covers only 47 per cent of the labour force.
"We are trying to accommodate the needs of the informal sector. These are the contract for service workers, own account workers, business owners and creative industries, whereby the main concern is cash flow," Employees Provident Fund (EPF) chief strategy officer Nurhisham Hussein said in a briefing on Tuesday.
"That's below the global average of 68 per cent of the labour force being covered by any kind of pension scheme."
Nurhisham said the proposal for a third flexible withdrawal account, Account 3, was part of its efforts to increase coverage on the informal sector especially.
He said as in the case of many emerging economies, Malaysia lagged in terms of people covered under retirement schemes, exposing many to income insecurity at old age.
Nurhisham added that achieving basic savings by age remained a key challenge for a large majority of EPF members.
"More than half of the members nearing full withdrawal age (50-54 years) have less than RM50,000 in savings, the equivalent of monthly replacement income of RM208 or below.
"The savings of EPF members have faced additional setbacks due to the Covid-19-related withdrawals, leaving them more vulnerable to the risk of old-age poverty."
On efforts to enhance retirement income adequacy, Nurhisham said EPF would be introducing "Simpan Baik-Baik Campaign", which was a conversational financial literacy narrative via multiple channels.
He said it would also launch the "Jom Tambah Campaign", promoting EPF's voluntary contribution programme to encourage members to boost their retirement savings.