1st August 2025 - 3 min read
The government is looking into a new pension payout system for the Employees Provident Fund (EPF), which would provide members with a monthly income stream after they retire. This proposal is part of the Thirteenth Malaysia Plan (13MP) and aims to improve the financial stability of retirees.
Under the proposed plan, retirees would have an additional option besides the current lump-sum withdrawal. This new mechanism is being explored to ensure Malaysians have a continuous and adequate source of income to support their well-being in their old age.
According to the 13th Malaysia Plan report, the government is considering a mechanism that would allow for EPF contributions to be separated into two parts. One part would be for retirement savings, and the other would be for a retirement pension.
This potential system would allow workers to withdraw a portion of their savings upon reaching retirement age, while also receiving a monthly pension. The goal is to provide a more stable and continuous income throughout a person’s retirement years.
Currently, EPF members can withdraw their entire savings from Accounts 1 and 2 when they reach the retirement age of 55.
The EPF savings structure is divided into three separate accounts. The Retirement Account, or Account 1, is designed for long-term savings accumulation to fund a comfortable life after retirement and can only be accessed once a member retires. Savings in the Wellbeing Account, known as Account 2, can be used for specific pre-retirement needs such as housing, education, healthcare, and performing the hajj. The Flexible Account, or Account 3, was introduced to meet the short-term financial needs of members, allowing for withdrawals at any time with fewer conditions.
The proposal to introduce a pension payout option stems from the need to ensure retirees have sufficient and stable financial resources. The 13th Malaysia Plan highlights that having adequate retirement savings is crucial for the well-being of workers in their old age.
By providing a steady monthly income, this new mechanism aims to help retirees manage their finances more effectively throughout their post-employment years. This reform is part of a broader effort to create a more dynamic and sustainable employment ecosystem that supports the livelihood of the people, in line with the MADANI Economy’s aspiration to raise the standard of living.
Stay tuned for more coverage as we continue to explore how the 13th Malaysia Plan will influence policies, prices, and your personal finances in the years to come.
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