Economist: Raise EPF Full Withdrawal Age To 60

Alex Cheong Pui Yin

28th April 2023 - 3 min read

Economist Dr Yeah Kim Leng has proposed for the Employees Provident Fund (EPF) to extend the age for full withdrawal of members’ retirement funds from 55 years old to 60 years old, in line with the current retirement age. This is in a bid to increase the longevity of their funds, allowing them to sustain themselves more comfortably in their golden years.

Aside from that, Dr Yeah – who is also an economics professor at the Sunway University – suggested as well that the government can consider gradually increasing the retirement age from the current 60 years old to 62 years old, and then to 65 years old. This accounts for the extended life expectancy of Malaysians, attributed to better healthcare and healthier lifestyle.

“There is also a need to promote productivity and reskilling for those who have little EPF savings to help them earn a higher salary and increase their savings. Workplaces must also be conducive to re-employing senior citizens and retirees to help them earn an income. It is also important for people to learn financial literacy at a younger age to stop them from falling into the poverty trap later in life,” Dr Yeah further stated.

The expert also urged those who are aged 40 and above – or are close to retirement – to take the initiative to learn more about income generating opportunities. They can then tap into these opportunities to gain some income, thereby avoiding old-age poverty.

Dr Yeah also said that if the government fails to take action soon, its social spending is set to increase in the future, with more Malaysians reaching their retirement age without adequate savings to sustain themselves. This is especially as many contributors have depleted their EPF savings through the four rounds of special withdrawals allowed during the Covid-19 pandemic.

“If contributors made the withdrawals for investment purposes, then they would be earning passive income. But if they used the withdrawals for consumption purposes, then it could lead to old-age poverty as they would not have enough savings to sustain themselves. Hence the government will have to support these people if they are facing poverty, and that will lead to an increase in government spending, which is already going up due to the ageing population and poor health among many caused by non-communicable diseases,” said Dr Yeah.

Concurring with Dr Yeah’s observations, financial planning director of Finwealth Management, Felix Neoh also said that Malaysian wages need to be raised to help tackle the issue as well. He commented that this is because the people’s purchasing power has long been outpaced by real inflation, and the public is now forced to spend more for daily necessities. In turn, this leaves them will less to save for retirement.

“Reskilling to take on higher value-added jobs with a higher salary, and delayed retirement or going into semi-retirement, such as working shorter hours and at a correspondingly lower salary after the official retirement age to delay the drawdown in retirement are some options,” said Neoh.

Dr Yeah’s and Neoh’s concerns regarding the critical state of members’ EPF savings have also been highlighted by Prime Minister Datuk Seri Anwar Ibrahim previously. He noted earlier this month that an estimated 81% of EPF members will not have sufficient savings to live above the poverty line after their retirement.

(Source: The Sun Daily)

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Alex Cheong Pui Yin

Previously covered recruitment-related stories and had a short stint as a copywriter for the property industry. She subsequently developed an interest in investment and robo-advisors.

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