Over half of Malaysia’s Employees Provident Fund (EPF) members under the age of 55 have less than 10,000 ringgit (US$2,210) saved in their retirement accounts, Nurhisham Hussein, chief strategy officer of the country’s largest pension fund, says in interview with a local newspaper, calling it a “very worrying” situation.
The EPF, which manages the retirement savings of private sector employees and the self-employed, had more than 14 million members as of end-2022.
Their savings were depleted after members pulled out a total of 145 billion ringgit through four rounds of withdrawals allowed by the government over the last two years, aimed at helping them to cope with financial hardship caused by Covid-19.
In an interview with Malay language newspaper Berita Harian, Nurhisham says 6.67 million or 51.5% of members younger than 55 had less than 10,000 ringgit in their accounts as of end-2022, up from 6.08 million a year ago.
“The majority of members still have low savings…This situation is very worrying,” he says in the report.
The pension fund estimates it will take three to five years for their savings to return to the original levels, he says.
The government and the EPF will have to come up with solutions to encourage members to boost their retirement savings, according to a fund manager at a local asset management firm.
“I don’t think there’s a one-size-fits-all solution, you need to address the issue from different angles. One of the ways is to encourage employers to contribute more by giving them more tax incentives,” he tells Asia Asset Management, speaking on condition of anonymity.
The EPF had 961.01 billion ringgit of assets under management as of end-September.