In a written response to Pandan MP Datuk Seri Dr Wan Azizah Wan Ismail inquiring about the number of active Employment Provident Fund (EPF) contributors with savings less than RM 50,000 – the Ministry of Finance, Senator Tengku Datuk Seri Zafrul Tengku Abdul Aziz has conveyed the dire state of many Malaysians retirement funds as of 30th September.
As of 2019, there are 14.5 million EPF members nationwide with only 7,626,262 members actively contributing .
- A record of RM 101 billion was withdrawn by 7.4 million of EPF members through the i-Lestari, i-Sinar and i-Citra programmes, the government aid set up during the Covid-19 pandemic .
- Consequently, 6.1 million members have less than RM10,000 in their accounts 
- And from that 6.1 million members, 3.6 million of the contributors had an amount lower than RM1,000 in their accounts .
The population breakdown
- At least 78% of those who have applied to withdraw their savings are Bumiputras .
- 4.4 million or 54% of those with less than RM 10,000 in their EPF accounts are Bumiputras .
- 25% of Bumiputras have less than RM 1,000 in the EPF accounts.
- Five million of the B40 contributors alarmingly sees their savings reduced to an average of RM 1,005 .
Those nearing retirement age
In the same written statement, the situation isn’t any better for those retiring in less than 15 years:
- Among the 1.62 million active EPF members between the age of 45-59, 29.6% (479,000 members) have savings not exceeding RM 50,000 .
“It should be stressed that although 70 percent of active members aged 45 to 59 have over RM50,000 in savings, this is not a comfortable amount for retirement, RM50,000 was only sufficient for a monthly RM1,000 expenditure for four years, or a paltry RM200 per month for 20 years.” Senator Tengku Datuk Seri Zafrul Tengku Abdul Aziz, Ministry of Finance response to Pandan MP Datuk Seri Dr Wan Azizah Wan Ismail 
What does this mean?
- The Employee Provident Fund (EPF) estimates that many of their contributors will need to work an extra 4 to 6 years to rebuild their savings to meet the Basic Savings threshold (RM240,000 at age 55).
- It is estimated that only 27% of members will meet the basic threshold at the end of 2021, a significant drop from 36% members in 2020 .
- Almost three-quarters or 73 per cent of EPF members have insufficient retirement funds to retire above the poverty line.
“Working longer adds virtually nothing to retirement income,” Dr Geoffrey Williams, Malaysia University of Science and Technology economist and professor 
At the briefing of the International Social Wellbeing Conference 2021 titled “The New Narrative: Turning the Tide on Inequality”, Dr. Williams stated that there should be an emphasis on reforming the current pension structure. Further, he suggested for a universal basic pension be made available, the radical shift, however, requires the involvement of national discussion and public consensus .
“What we need is to weigh on a single figure pension system based on contributions from wages and to move towards a more structured pension scheme, or a more comprehensive pension scheme in which that proportion of contributions from wages remains as a significant component of the pension scheme, but isn’t the only and certainly not the main component of the pension scheme. ” Dr Geoffrey Williams, Malaysia University of Science and Technology economist and professor 
The call for better social protection also has been at the forefront of a not-for-profit research institute; Khazanah Research Institute. Their recent report, “Building Resilience: Towards Inclusive Social Protection in Malaysia”  has highlighted that:
- The social protection coverage in Malaysia left a chunk of the population (informal employees, the middle-class group and senior citizens who are outside of the civil works) aptly termed as the “missing middle.”
- With the current social protection system in place, at least 82% of EPF contributors would have trouble sustaining themselves during retirement.
Find out more about the 12 things every Malaysian should know about social protection. Also, we previously addressed the plights of the “missing middle in Malaysia” and what can be done if you are part of the group.
Explore our sources:
1. KWSP/EPF.(2019). Living Our Values: Annual Report 2019. Link
2. R.Razak. (2021). Finance Ministry: 3.6 million EPF contributors have less than RM1,000 in their accounts. Malay Mail. Link
3.N.Daim. (2021). 3.6 million EPF members have less than RM1k in savings, Dewan Rakyat told. New Straits Times. Link
4. J.Lim & S.Salim. (2021). ‘Impossible’ for many Malaysians to replenish EPF Account 1 during rest of working life — economist. The Edge Markets. Link
5. Khazanah Research Institute. (2021). Building Resilience: Towards Inclusive Social Protection in Malaysia. Link