The Employees Provident Fund (EPF) will increase the threshold for members with excess savings starting in 2026. The change is designed to offer greater flexibility for retirement planning, aligning with evolving economic conditions and rising living costs. The pension fund stated in an email that its excess savings threshold will be defined as any amount over RM1.1 million.

The new threshold marks an increase from the current RM1 million limit. Following this initial change, the threshold will be progressively raised to RM1.2 million in 2027 and then to RM1.3 million in 2028. EPF members with balances above these new limits will be permitted to make withdrawals. The adjustments reflect EPF’s commitment to balancing the need for sufficient long-term savings with its members’ immediate financial needs.

Stronger Contributions Drive Retirement Readiness

Retirement readiness among Malaysian workers is on the rise, according to EPF data. This improvement, which is also evident in RinggitPlus’ forthcoming RMFLS 2025 report, is attributed to a steady increase in voluntary top-ups and contributions that exceed the statutory rate. A significant policy change in May 2024, which directed 75% of contributions into Akaun Persaraan (Retirement Account) up from the original  70% contribution, has also reinforced long-term savings habits among members.

In 2024, voluntary contributions saw a remarkable 62% increase. The  surge indicates a growing awareness of retirement planning. As of last year, 37% of active formal EPF members had met the Basic Savings threshold, a notable improvement from the 30% recorded in 2022. Among members aged 51 to 55, the figure rose to 42%, up from 36% just two years earlier.

Basic Savings Target To Increase

EPF is also updating the Basic Savings threshold under its new three-tier Retirement Income Adequacy (RIA) framework. This is the minimum amount members should have to support themselves through retirement. The target for members reaching age 60 will progressively increase from the current RM240,000 to RM290,000 in January 2026, RM340,000 in January 2027, and finally RM390,000 in January 2028.

According to Dr Azmi Hassan, a senior fellow at the Nusantara Academy for Strategic Research, the increase reflects the government’s efforts to keep pace with inflation and demographic shifts. He notes that the new target is a meaningful step toward a more resilient retirement system, as stronger voluntary contributions are driving the increase.

New Framework And A Focus On Stability

Dr Azmi also commented on a proposal under the 13th Malaysia Plan (RMK13) to restructure EPF withdrawals into a monthly, pension-style payment system. He explained that this approach would introduce discipline and long-term sustainability. Unlike a single lump-sum withdrawal, monthly payouts offer a more systematic method that can help members avoid outliving their savings.

A shift delivers stability, helping to protect members as Malaysia’s population ages. Dr Azmi added that a monthly withdrawal system would act like a pension, providing a predictable and stable source of income rather than leaving retirement security to individual spending habits. He believes it is a substantial move towards a more secure retirement for all Malaysians.

Is Malaysia Ready For Retirement?

The positive trends in EPF contributions raise an important question: are Malaysians truly getting better at planning for retirement? The answer, along with key insights into the nation’s financial habits and confidence levels, will be revealed in the upcoming 2025 Malaysian Financial Literacy Survey (RMFLS).

What are your thoughts on these changes? Drop a comment below and let us know!

Stay tuned as we will be releasing the results of the RinggitPlus Malaysian Financial Literacy Survey (RMFLS) 2025 soon! 

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• EPF
• EPF Basic Savings Threshold
• Retirement Planning
• Savings