KUALA LUMPUR: THE Employees Provident Fund (EPF) has announced an array of improvements and enhancements in its schemes to bring the fund up to speed with current trends and legislation at home and abroad.
On the home front, EPF is introducing Akaun Emas as a second retirement nest egg for members working beyond the age of 55, effective January 1.
The fund reassured the public that there is no change to the current withdrawal age of 55 for Akaun 55, where members can make full withdrawals.
For those who continue working after the age of 55, their EPF contributions will automatically go to Akaun Emas.
All new contributions (from age 55 onwards) can only be withdrawn when members reach the age of 60.
EPF chief executive officer Datuk Shahril Ridza Ridzuan also explained EPF’s new basic savings quantum, saying the RM228,000 amount was arrived at on the basis that it reflects the revised minimum monthly pension for public sector employees.
He also said in line with the law, members will no longer be protected from having illegal proceeds.
“This is to protect EPF from being dragged into litigation and issues in other jurisdictions.”
He also updated the media yesterday on nomination changes for Muslim contributors.
“Under syariah principles, nominees act only as administrators and not beneficiaries because the actual division of assets will be subject to Islamic laws,” he said.
If a Muslim nominee could not be found or traced within a year, EPF will cancel the nomination so that the family can apply to the syariah courtto have the assets distributed.
For non-Muslims, there is no change.
Shahril also said there is more flexibility for EPF members under the Members Investment Scheme to allow them to drawdown 20 per cent at a time for investments in unit trusts.
Units trusts are now allowed to introduce funds with higher percentage of foreign equity to provide EPF members a wider range of products.
Shahril said these improvements and enhancements will help members increase their savings and contributions so that they can grow their pot of money upon retirement.
In line with global trends and greater worker mobility, EPF will also extend to foreign workers all the withdrawal options enjoyed by Malaysian contributors, such as the schemes for ages 55 and 60, and withdrawal for housing, medical and education.
These initiatives are to protect EPF members further in light of the issues that they face upon retirement age.
“A majority of Malaysians are not ready for retirement. The average lifespan of Malaysians has increased to an average of 75 years.
“We have to be prepared for a longer period of drawdown of savings. A large number has not achieved basic savings. Basic savings is the guide that we give to our members to plan for their financial future, to achieve a certain minimum amount of savings, and a certain amount of minimum monthly income based on the savings,” said Shahril.
There has been concern among policymakers as a majority of EPF contributors will likely exhaust their EPF savings within five years upon retirement.
This new regulation will extend their mandatory EPF contributions by another five years and increase their savings.