The Employees Provident Fund (EPF) has highlighted that more than 40% of Malaysia’s workforce are not protected under any formal retirement scheme, particularly informal workers. In fact, the EPF itself covers only 47% of the labour force.  

“That’s below the global average of 68% of the labour force being covered by any kind of pension scheme,” stressed the chief strategy officer of the EPF, Nurhisham Hussein, who also explained that informal workers in this case referred to contract-for-service workers, own-account workers, business owners, and various other positions in creative industries.

Nurhisham further said that this limited retirement protection is a common challenge among many emerging economies, where many of its citizens are exposed to income insecurity at old age. Achieving the basic savings threshold (which is set by one’s age) also continues to be a key obstacle for many EPF members.

“More than half of the members nearing full withdrawal age (50 – 54 years) have less than RM50,000 in savings, the equivalent of monthly replacement income of RM208 or below. The savings of EPF members have faced additional setbacks due to the Covid-19-related withdrawals, leaving them more vulnerable to the risk of old-age poverty,” Nurhisham stated, referring to previous special withdrawal facilities that had been launched, namely i-Lestari, i-Sinar, i-Citra, and a final RM10,000 withdrawal.

Given this data, Nurhisham said that the provident fund is seeking various ways to assist its members and enhance retirement income adequacy, especially for those who are in the informal sector. One such method is the recently proposed Akaun 3, which will function similarly to a savings account; members can make unconditional withdrawals from this special account in the event of emergencies.

Nurhisham also noted that the EPF is looking to introduce the Simpan Baik-Baik and Jom Tambah campaigns. Specifically, the Simpan Baik-Baik campaign seeks to create a conversational financial literacy narrative via multiple channels to educate members, while the Jom Tambah campaign promotes the EPF’s voluntary contribution programme.

(Source: New Straits Times)

• TAGS:
• Employees Provident Fund
• Employees Provident Fund (EPF)
• EPF
• Nurhisham Hussein
• Retirement Funds
• Retirement Planning
• Retirement Savings
• Retirement Security