EPF refutes allegation of cash crisis and law amendment

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KUALA LUMPUR, April 12 The Employees Provident Fund (EPF) has refuted speculation of a cash crisis piling up in pension funds as well as the amendment of the EPF Act 1991 to prevent retirees from withdrawing their saving.

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In a statement, the retirement savings fund said it has always maintained sufficient liquidity to meet all of its obligations.

He said selling and buying assets overseas is an integral part of ETH’s investment operations as one of its asset allocation strategies, pointing out that this decision does not was not intended for the payment of premature withdrawals.

“In fact, there has been a slow but steady increase in overall ETH overseas exposure over the years, even during the Covid-19 crisis.

“Furthermore, there is no truth to the speculation that the EPF law of 1991 will be amended to prevent pensioners from withdrawing their savings,” he said.

EPF released the statement to refute speculation circulating via WhatsApp which referred to an article titled “Bank Negara says Malaysians may run out of savings 19 years too soon” published by an international daily on April 7.

“What Bank Negara Malaysia (BNM) has highlighted is the dire situation of pensioners even before the pandemic due to structural issues such as low wages,” she said.

According to BNM, the median savings for the 51-55 age group would have lasted only five years when withdrawing at age 55, and that fell to about three years after pandemic-related withdrawals.

“The report further indicates that an average Malaysian would be at risk of depleting their retirement savings 19 years before death, with global life expectancy increasing to over 77 by 2050,” he said.

Additionally, millennials in the 26-40 age bracket are likely to face significant financial challenges, as many of them struggle to meet the basic savings threshold. ETH of RM240,000.

“The pandemic-related special withdrawals have also resulted in significant reductions in the amount of retirement savings for affected members, the EPF said.

In March 2023, 70.5% of the 7.2 million active members of the formal sector aged between 18 and 55 did not reach the ETH basic savings threshold by age, while 3.1 million or 39% members who had made special withdrawals and had not reached age 55 in January 2023 did not begin to replenish their savings.

As such, their savings levels remain extremely low with a median saving of RM890, EPF said.

“Our main concern in this regard is to prioritize the rebuilding of retirement savings and to extend coverage to those who fall outside the current scope of the EPF Act 1991.

“ETH and the government are also discussing other areas of reform that could be helpful in addressing the current poor state of pension adequacy which has been further exposed by the pandemic,” he said.

The pension fund also advised its members to only trust communications from official sources, not social media speculation. Bernama

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