5th August 2025 - 3 min read
The way you receive your EPF savings at retirement might be changing. The government is considering a new monthly pension-style payout system. While intended to help retirees manage their funds, there’s a growing debate about whether this should be forced on everyone.
We’ve taken a look at what this could mean for you and your retirement funds.
As part of the 13th Malaysia Plan, the government is looking for a way to give retirees a more stable income. The idea is to supplement the current lump-sum EPF withdrawal with a mandatory monthly payout.
The proposal suggests splitting your retirement funds into two parts. One part would be available for a lump-sum withdrawal when you retire. The other part would be paid to you as a fixed monthly pension. The goal is to prevent retirees from exhausting their savings too quickly, ensuring they have a steady income stream throughout their later years.
There is no denying that the proposal’s intention is good. Forcing the change on EPF contributors seems to be a major point of contention. Datuk Mohd Shahar Abdullah, a government backbencher, recently argued that any new monthly payout plan must be flexible and optional. He pointed out that EPF already offers a voluntary monthly withdrawal option for members who prefer it.
The core of his argument is simply that financial needs are personal. Some retirees may need a large lump sum to settle a housing loan, start a business, or cover significant medical costs. A mandatory monthly payout, no matter how well-intentioned, removes flexibility and imposes a one-size-fits-all solution where it isn’t needed. The focus, he argues, should be on respecting individual choice rather than imposing blanket policies.
Another issue raised by critics is protecting your retirement income from inflation. A fixed monthly payment priced for today’s economy won’t have the same buying power ten or twenty years from now. This exact point was emphasised in Parliament during the debate.
According to Datuk Mohd Shahar Abdullah, “If the proposal to introduce a monthly annuity is to be expanded or made the default option, it must be protected against the effects of inflation. This means the annuity or monthly pension payment structure must be reviewed regularly and adjusted in line with the rising cost of living.”
In short, without built-in adjustments for inflation, the “stable income” the plan aims to provide could quickly become insufficient, defeating the entire purpose of the scheme.
Should you be worried about your current EPF savings? The Deputy Finance Minister has clarified that the proposed monthly payout system, if implemented, would only apply to new EPF members.
The withdrawal rights of existing members are expected to remain unchanged. Any transition to a new structure for current contributors would be completely voluntary. This means you will still have the choice to take out your savings as a lump sum under the current rules.
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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