The World Bank has recommended that Malaysia consider aligning the withdrawal age for the Employees Provident Fund (EPF) with the country’s statutory retirement age. The organisation explained that this alignment would help preserve the adequacy of retirement savings and reduce the risk of older Malaysians exhausting their funds too early in life.

Malaysia’s Retirement Framework Today

Malaysia’s Minimum Retirement Age Act 2012 sets the private-sector retirement age at 60 years, effective since July 2013 [PDF]. Under current EPF regulations, members can fully withdraw their savings at age 55 or age 60, depending on the account. This system allows access to funds before formal retirement, which the World Bank warns may weaken income security in later years.

According to the organisation, most countries restrict access to pension savings until individuals reach the official retirement age. Doing so ensures that funds continue to serve their intended purpose of providing income during retirement, rather than being spent during remaining working years. Allowing early withdrawals, it said, increases the likelihood that individuals may deplete their savings and later depend on government assistance.

Concerns About Early Withdrawals And Longevity

The World Bank’s position is shaped by Malaysia’s shifting demographic profile. Life expectancy now exceeds 75 years, based on data from the Department of Statistics Malaysia (DOSM). This means that many Malaysians can expect to spend more than 15 years in retirement. However, median EPF savings at age 55 remain low. A 2023 EPF analysis found that the typical member had less than RM40,000 upon reaching withdrawal age, which would not be sufficient to sustain even a modest standard of living for more than a few years.

The World Bank argued that aligning the EPF withdrawal age with the statutory retirement age, or increasing both gradually, would allow members to accumulate larger balances and maintain financial independence for longer. It added that in countries with similar economic structures, delayed access to savings often results in higher replacement rates and better long-term income security.

Global Practices And Policy Context

Globally, retirement systems are evolving to reflect longer life expectancy and rising living costs. According to the OECD Pensions at a Glance 2023 (which analyses retirement systems across 38 developed economies), the average statutory retirement age among OECD countries is 64 for men and 63 for women, with many economies introducing gradual increases to 67. Singapore is raising its retirement age from 63 to 65 by 2030, while Thailand maintains 60 as the formal retirement age but structures its public pensions around 65.

In contrast, Malaysia’s EPF withdrawal age of 55 stands out as one of the lowest internationally. The World Bank observed that this early threshold is no longer consistent with the country’s longer life expectancy, evolving labour market, and shift towards an ageing society. The report also referenced international experience showing that raising withdrawal and retirement ages in small, predictable steps can reduce the risk of poverty among retirees without creating significant labour market disruption.

Expanding And Strengthening Social Pensions

The World Bank’s report focuses on the broader question of how Malaysia can enhance income protection for older citizens, particularly those who do not contribute to formal savings schemes. It highlights the role of Bantuan Warga Emas (BWE), a non-contributory social pension providing RM500 per month to eligible low-income individuals aged 60 and above.

Only about 4% of Malaysians in this age group currently receive BWE assistance, which the report describes as a low coverage rate compared with other middle-income countries. It suggests that expanding coverage to include more B40 households could improve income equity and reduce poverty among older Malaysians. The report also notes that Malaysia’s eligibility age of 60 is lower than the benchmark of 65 used in many countries. Setting a slightly higher eligibility age could help manage fiscal costs while concentrating assistance on those most in need.

To improve delivery, the World Bank recommends closer integration of social assistance programmes through the PADU central data system. This would help ensure better targeting, avoid overlap with other forms of aid, and allow policymakers to assess the long-term fiscal implications of expanding such programmes.

Policy Considerations For Malaysia

As of November 2025, the government has not announced any plans to amend the EPF withdrawal age or the statutory retirement age. However, the issue remains part of ongoing policy discussions under the 12th Malaysia Plan (2021–2025) and the National Social Protection Council (MySPC), which aim to modernise the country’s social protection framework.

The World Bank emphasises that any change should be implemented gradually and based on broad public consensus. Incremental increases in the withdrawal and retirement ages, supported by clear communication and phased implementation through gazette notification, would give both employers and employees time to adapt.

It also noted that the distinction between contributory schemes like the EPF and non-contributory social assistance such as BWE is important. Each plays a different role in ensuring that Malaysians can age with financial dignity, and reforms should balance both pillars to maintain sustainability and fairness.

Towards A More Resilient And Inclusive Retirement System

Malaysia’s demographic transition is accelerating. Finance Minister II Datuk Seri Amir Hamzah Azizan, who is currently carrying out the duties of Economy Minister, has highlighted that Malaysia is projected to reach aged-nation status by 2048, when 14%of the population will be aged 65 and above.

The World Bank cautions that without timely adjustments to retirement and pension policies, a growing share of future retirees could face financial insecurity. Aligning the EPF withdrawal age with the retirement age would help ensure that savings last longer, while expanding and improving the design of social pensions such as BWE could provide a stronger safety net for those without formal savings.

These measures, together with prudent fiscal management, could support a more balanced and resilient system that protects retirees and prepares Malaysia for the realities of an ageing society. Although no legislative changes are currently in force, the World Bank’s recommendations underline the importance of early preparation.

Building a sustainable retirement system will require consistent policy alignment, long-term planning, and public engagement. Ensuring that Malaysians can retire with stability and dignity will depend on how effectively these reforms are designed and implemented in the years ahead.

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