EPF Pension Plan: New Members Only, Says Deputy Finance Minister

Existing EPF Contributors Can Opt-In Voluntarily to New Retirement Payout Structure

KUALA LUMPUR, Aug 7 — A proposed monthly pension-style payment system for Employees Provident Fund (EPF) members, announced under the 13th Malaysia Plan, will not impact the withdrawal rights of current account holders. The new mechanism is slated to apply only to individuals who join the EPF after its implementation date.

Restructured Savings for Longevity

Deputy Finance Minister Lim Hui Ying clarified that existing EPF members will have the option to voluntarily participate in the new system. This initiative aims to ensure that members’ retirement funds last longer, aligning with increasing life expectancies.

“The proposed restructuring of EPF accounts will introduce a new mechanism allowing part of members’ savings to be allocated specifically for regular income during retirement,”

—Lim Hui Ying, Deputy Finance Minister

The planned changes will see EPF savings divided into two primary components upon reaching the minimum retirement age. A “flexible savings” portion will remain accessible for withdrawal as needed, while an “income savings” segment will be disbursed regularly, potentially on a monthly basis, until depleted.

Strengthening Retirement Security

This adjustment seeks to bolster retirement income security and promote more sustainable financial management for members in their later years. The rationale behind introducing these pension-style payouts was questioned by Mordi Bimol (PH-Mas Gading) during a Dewan Rakyat session.

In Malaysia, the average life expectancy has been steadily increasing. In 2022, it reached 73.5 years for men and 77.7 years for women, highlighting the need for longer-term retirement income solutions (Department of Statistics Malaysia).