6th March 2023 - 2 min read
The Employees Provident Fund (EPF) revealed that the median savings of its bumiputera and Indian members have dipped significantly. This is following the multiple special withdrawals that was allowed during the Covid-19 pandemic in the past two years, which came up to a total of RM145 billion.
Specifically, bumiputera EPF members saw a 70% plunge in their median savings, from RM15,500 as of April 2020 to RM4,900 as of December 2022. Meanwhile, the median savings of Indian EPF members fell by 40%, from RM25,700 to RM14,900 during the same period. EPF members in the Chinese community, on the other hand, were less impacted; their median savings dipped 1% from RM45,800 as of April 2020 to RM45,200 as of December 2022.
In terms of income groups, the median savings of EPF members in the B40 income group saw the worst impact; it fell 70% from RM2,434 as of April 2020 to RM577 as of December 2022. This was followed by the M40 group, whose median savings dropped from RM30,113 to RM19,926 during the same period (34%). The T20 group, on the other hand, grew their median savings by 9%, from RM140,440 to RM152,964.
It was also noted that B40 and M40 individuals made up 5.2 million EPF members, while T20 individuals only made up 2.3 million EPF members.
In light of these statistics, chief executive officer of the EPF, Datuk Seri Amir Hamzah Azizan reiterated that another special withdrawal just is not feasible. “For us, we cannot allow more withdrawals, because the base has now gotten too low for some groups,” he stressed.
Aside from that, Datuk Seri Amir Hamzah also highlighted that the low wage structure in Malaysia is one of the several factors that contributed to the inadequacy of retirement savings among Malaysians. As such, more initiatives need to be undertaken to boost the existing salary level to the living wage of RM2,700.
Other factors that also contributed to low retirement savings among Malaysians include inconsistent EPF contributions from members and low financial literacy. “From the survey we have been running for years, we have seen that financial literacy among Malaysians remains very low,” said Datuk Seri Amir Hamzah, adding that EPF members’ financial literacy rate is recorded at 29%.
In comparison, the financial literacy rate of Malaysians in general stood at 36%, while Singapore citizens had a financial literacy rate of 78%.
(Source: The Edge Markets)
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