SINGAPORE - Malaysia’s Employees Provident Fund (EPF) refuted allegations that have been circulating via WhatsApp over the past week claiming that there is a cash crunch crisis building up in the retirement fund.
In a media statement on Wednesday, the EPF said it has always maintained sufficient liquidity to meet all its obligations.
“The sale and purchase of overseas assets is a normal part of the EPF’s investment operations as part of its asset allocation strategy, and not to pay for premature withdrawals,” it added.
The EPF also noted that there is no truth to the speculation that the EPF Act 1991 will be amended to prevent retirees from withdrawing their savings.
The speculation referred to a Bloomberg article titled “Bank Negara says Malaysians could run out of savings 19 years too soon”, published last Friday.
The article noted that Malaysians could run out of savings by the age of 58 due to low wages, high debt and premature withdrawals from their retirement funds during the pandemic, according to Bank Negara Malaysia (BNM).
“What BNM has highlighted is the dire situation for retirees, even before the pandemic, due to structural issues such as low wages,” the EPF said in its statement.
The pension fund added that the median savings for those aged 51 to 55 would have lasted only five years upon withdrawal at 55, and this figure dropped to around three years after pandemic-related withdrawals.
The article also mentioned that with global life expectancy rising to above 77 years old by 2050, an average Malaysian would be at risk of depleting his retirement savings 19 years before death.
Millennials aged 26 to 40 were likely to be the hardest hit between 2020 and 2022, as many of them struggled to meet the EPF’s Basic Savings threshold of RM240,000 (S$72,800).
“The special pandemic-related withdrawals have also resulted in significant reductions in the amount of retirement savings for the members involved,” said the EPF.
It shared that as at March, 70.5 per cent of the 7.2 million active formal-sector members aged 18 to 55 do not meet the EPF’s Basic Savings threshold by age.
Furthermore, 3.1 million, or 39 per cent of members who made special withdrawals and are below the age of 55 as at January have yet to rebuild their savings, which remain critically low at a median of RM890.
“EPF’s primary concern in this matter is to prioritise the rebuilding of retirement savings and to extend coverage to those who fall outside the current scope of the EPF Act 1991,” the retirment fund said.
It added that it is in discussions with the government on further areas of reform to improve the current state of retirement adequacy.
The EPF advised its members to trust only communications from official sources, and not speculation over social media. THE BUSINESS TIMES
