SHAH ALAM - Malaysians retiring in 20 to 30 years will need to have at least RM900,000 (S$279,633) to RM1 million (S$309,422), said the Employees Provident Fund's (EPF), Malaysia's largest pension fund.
EPF chief strategy officer Nurhisham Hussein said this would be the "bare minimum" after factoring inflation and medical bills, among others.
For those retiring in the next few years, he said it would take about RM600,000 to have a "dignified" retirement in Kuala Lumpur.
"When you look at the RM600,000 savings threshold, only about 4 per cent of Malaysians could afford to retire. It is a little lower outside of the Klang Valley," he said.
Mr Nurhisham said the RM600,000 could only cover ordinary outpatient medical needs or visits to general practitioners and not any major medical needs.
Based on EPF's calculation, he said Alor Setar - the state capital of the northern Malaysian state of Kedah - was the cheapest place to have a comfortable retirement.
But even in Alor Setar, a person would need RM480,000 to retire there, which is twice the basic threshold for retirement savings of RM240,000, he said in an interview.
He also pointed out that Malaysia is a rapidly ageing society.
Mr Nurhisham said some 56 per cent contributors, who are 54 years old, have less than RM50,000.
With RM50,000, he said one can only sustain for a little over four years, assuming that their expenses amount to RM1,000 a month.
Currently, about 52 per cent EPF members have less than RM10,000 in their accounts while about 27 per cent have less than RM1,000.
"That's rather worrying. Obviously I think the withdrawals have had a significant impact on retirement adequacy," he said.
Prior to the Covid-19 pandemic, about 22 per cent members met the basic requirement saving but the numbers fell to 14 per cent after several rounds of special withdrawal schemes namely i-Sinar, i-Lestari, i-Citra and most recently the special withdrawal facility of RM10,000.
Deputy Finance Minister I Mohd Shahar Abdullah had told Parliament's Senate last month that in total, RM145 billion was withdrawn by EPF members under the four withdrawal facilities.
He also said overall, the impact of these programmes related to Covid-19 on members' savings was estimated at RM155 billion, comprising RM145 billion withdrawn by members under the four withdrawal programmes, and almost RM10 billion from the impact of the employee share statutory contribution rate reduction programme.
In a survey by an insurance company, Sun Life Malaysia, 4 per cent of respondents said they no longer have enough in their EPF accounts to make a withdrawal.
On what can be done, Mr Nurhisham said multiple sources of savings and investments would now be needed in addition to EPF savings.
EPF was also pushing for people to open an account with the retirement fund early on and not necessarily wait until they start working formally, he said. THE STAR/ASIA NEWS NETWORK