Malaysia’s government is proposing to split contributions to the Employees Provident Fund (EPF) into two – one that provides monthly payouts, and the other for lump sum withdrawal.
The EPF is now studying the proposal and a decision will be made after “thorough engagements” with key stakeholders, the pension fund says in a statement on August 1.
The fund issued the statement a day after the government disclosed the proposal in the 13th Malaysia Plan, its blueprint of plans for the country for the next five years.
According to Lim Hui Ying, the deputy finance minister, existing rights of current members won’t be affected, and they can choose to opt into the proposed structure.
The structure will provide “more stable and sustainable income stream” after retirement, she says in a Facebook posting on August 2.
EPF contributions are now split into three accounts, with 75% going into the main account. Members can only access this account when they turn 55 years old, at which point they can withdraw the money in one lump sum, or in smaller amounts over a period of time.
A study by the pension fund last year found that 25% of members exhaust the money within five years of lump sum withdrawal. The study also found that only 29% have post-retirement income that is similar to pension payouts.
