EPF Adjustment: Preparing for Retirement Savings

More Malaysians Boosting Retirement Savings For Longer Golden Years

Iman Aminuddin

25th September 2025 - 4 min read

An increasing number of Malaysians are taking proactive steps to strengthen their retirement savings, as they prepare for longer life expectancy and a potentially extended retirement period beyond 75. The Employees Provident Fund (EPF) has reported that retirement readiness is improving, with a noticeable rise in voluntary contributions and additional savings above the statutory rate.

EPF Members Showing Improved Retirement Preparedness

The latest figures from EPF show that 42% of members aged between 51 and 55 have already met the Basic Savings target for their age, up from 36% just two years ago. The Basic Savings threshold is a predetermined amount set according to a member’s age, ensuring that by the time a member turns 55, they will have at least RM240,000 in their Retirement Account. This figure is designed to allow members to withdraw RM1,000 monthly to meet basic retirement expenses from age 55 to 75.

With rising life expectancy and evolving financial needs, the EPF is gradually increasing the Basic Savings target for members reaching 60 years of age. By 2028, this amount will rise to RM390,000. The increase is aligned with the new three-tier Retirement Income Adequacy (RIA) framework, which is expected to help retirees sustain a better standard of living in their later years.

EPF Adjusting Basic Savings To Reflect Changing Needs

Under the new RIA framework, the Basic Savings threshold will see gradual increases, as follows:

RM290,000 by January 1, 2026
RM340,000 by January 1, 2027
RM390,000 by January 1, 2028

For members with RM390,000 in savings, monthly withdrawals could start at RM1,625 in the first year of retirement, rising to RM4,434 by year 20. Even with these increases, the amount may not fully meet the estimated RM2,690 required for a modest lifestyle in retirement, as calculated for a single elderly person.

Rising Average Savings Reflect Growing Retirement Awareness

The average savings of EPF members aged 50 to 54 have seen a significant increase, rising from RM265,788 in 2022 to RM308,644 in 2024. This figure surpasses the Basic Savings requirement for 2026, reflecting growing awareness and effort among members to secure a more comfortable retirement.

The positive trend can be attributed to recent policy enhancements and stronger contributions. One such policy change took place in May 2024, when EPF restructured member accounts, increasing the allocation to the Retirement Account from 70% to 75%. This shift directs more funds into long-term savings, providing members with a stronger financial foundation for their retirement years.

Voluntary Contributions Gaining Popularity

Another encouraging sign is the rise in voluntary contributions to EPF accounts. The i-Saraan and i-Suri schemes, designed to encourage voluntary contributions, have seen substantial growth, particularly among those in the informal sector. Voluntary contributions increased by 62% in 2024, and active membership is expanding at a faster pace than the overall labour force.

Similarly, employees in the formal sector are also boosting their retirement savings through the Voluntary Excess (VE) contribution programme, which allows them to contribute above the statutory rate. In the first half of 2025, 34,442 formal sector members made voluntary contributions, almost double the number recorded during the same period the previous year.

Potential Shift To Pension-Style Payouts

In July, Prime Minister Datuk Seri Anwar Ibrahim introduced a proposal to transition new EPF members towards monthly pension-style payments. Under this plan, future contributions would be split into two components: a Flexible Savings account, which could be accessed at any time, and an Income Savings account, from which members would receive regular monthly payouts until their savings are depleted.

The proposal stems from concerns over Malaysia’s ageing population and rising life expectancy, which could pose challenges to the adequacy of retirement income. While no changes have been made to EPF’s withdrawal or dividend distribution policies as of now, the government has stated that any proposed changes would be considered after a thorough study and consultation process.

Moving Towards Better Retirement Security

As Malaysians face longer retirements, the trend of increasing voluntary contributions to EPF highlights a positive shift towards greater financial security in retirement. With policy changes designed to direct more savings towards long-term retirement accounts, EPF members are positioning themselves better for the future. While further changes, such as pension-style payouts, are still under discussion, the overall movement towards improved retirement readiness is a step in the right direction.

These findings echo sentiments from the upcoming RinggitPlus Malaysian Financial Literacy Survey (RMFLS) 2025, which also observes rising confidence in EPF as more Malaysians begin to plan for retirement. Despite the good news, worrying gaps remain across income groups, particularly among the middle-income segment facing cost pressures.

The full RMFLS 2025 report will be released on 1 October, offering a more detailed look at how Malaysians are preparing for their financial futures. Stay tuned.

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