Two-thirds of EPF members risk retiring below poverty lines, says Anwar

The finance minister also says 6.7 million contributors aged below 55 have less than RM10,000 in their accounts.

(FMT) – More than two-thirds of active Employees Provident Fund (EPF) contributors aged 55 years and below will struggle to retire above the poverty line, revealed finance minister Anwar Ibrahim.

Anwar said the four tranches of EPF withdrawals in the past two years have resulted in the members’ basic savings dwindling from 36% in 2020 to 29% at the end of 2022.

“This situation directly shows that 71% or two-thirds of active contributors aged 55 and below are in a serious situation where their savings are insufficient for them to retire above the poverty line,” he said in a parliamentary reply.

He said that as of Dec 31 last year, up to 6.7 million EPF members aged below 55, or 51% of the total, had less than RM10,000 left in their accounts following the four withdrawals.

This amount will leave them with retirement savings of less than RM42 a month for the next 20 years.

He was responding to a question by Amirudin Shari (PH-Gombak) on the government’s stance on EPF withdrawals as a way to help ease the people’s financial burden.

Anwar said further withdrawals would also affect EPF’s bottom line because it would need to liquidate assets, and limit its participation in new investment opportunities, leading to a loss of potential long-term returns.

“This will affect the chances of generating income for dividend payments to contributors in the future,” he said.

He also said indicators have shown economic activities are in recovery mode, with trade in full swing and a large number of employees having returned to earning an income.

“Based on these facts, the government is of the view that a (further) withdrawal of EPF savings, whether targeted or otherwise, is not a long-term solution to the people’s financial burden,” he said.