The Employees Provident Fund (EPF) has emphasised that the adoption of a pension-like approach when disbursing members’ retirement funds – via a monthly drawdown – will help to ensure that they have some form of stable income in their post-retirement years. This comes following a recent announcement by Prime Minister Datuk Seri Anwar Ibrahim that the government is refining a proposal to make it mandatory for new EPF members to withdraw their savings periodically instead of receiving a lump sum once they hit their retirement age.

In a statement, the EPF said that it has been encouraging existing members to voluntarily shift to regular monthly payouts instead of making lump-sum withdrawals. “In 2022, more than 7,000 members have already voluntarily adopted the monthly payout option. The process of formalising the proposed monthly withdrawal mechanism is still being studied and will take into account the ability and readiness of members to make such transition,” it said.

The provident fund also stressed that such a transition is necessary because the average life expectancy of a Malaysian has increased from 54 years in 1957 to 75 years today. This figure is projected to further increase in the future, which means that people will have longer retirement years. As such, the monthly drawdown option may be a good way to prevent old-age poverty, and to ensure that retirees have enough to tide them over throughout their retirement years.

That said, the EPF also admitted that this proposed change will take time, requiring “a generational change”. It promised as well that it will keep all members updated of any upcoming policy changes well in advance, before it begins implementing any adjustments.

If successfully introduced, the proposed monthly drawdown will see a portion of members’ EPF savings converted into a monthly income, to be disbursed to them as scheduled. The remaining portion, meanwhile, can be withdrawn lump-sum.

(Source: Malay Mail)

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• Datuk Seri Anwar Ibrahim
• Employees Provident Fund
• Employees Provident Fund (EPF)
• EPF
• EPF Monthly Drawdown