Expert propose EPF account restructuring to maximise retirement savings

SHAH ALAM - It is critical that final savings in Employees Provident Fund (EPF) member accounts be maximised at retirement and then protected and conserved for as long as possible.

Malaysia University of Science and Technology (MUST) Provost for Research and Innovation Professor Geoffrey Williams suggested that EPF restructure Account 1 to prioritise saving and generate a higher monthly income.

"To compensate, EPF should offer additional voluntary savings options through Account 2, striving to become a comprehensive and trusted provider for various financial needs," he told Sinar Daily.

Williams also recommends strategies to assist in rebuilding funds and removing the cap on voluntary contributions, proposing tax exemption on voluntary savings until members reach the RM600,000 adequacy ratio.

Similarly, Universiti Tun Abdul Razak Emiritus Professor Dr Barjoyai Bardai stressed the distinction between EPF accounts and regular savings accounts after age 55.

"Members can withdraw any amount from their EPF account, maintaining the balance to receive annual payment dividends until their passing.

"EPF aims not only to remain relevant but also to improve retirement savings for all members," he said.

Barjoyai highlighted the potential for continued growth in EPF savings, with a track record of earning over 5 per cent annually in the last decade.

He advised members to withdraw only when needed rather than depleting their entire savings to pay off debts to ensure sustained growth.

Meanwhile, Bank Muamalat Malaysia Chief Economist and Social Finance Dr Mohd Afzanizam Abdul Rashid, supports the idea of flexibility in retirement funds.

He said permitting monthly withdrawals of a fixed amount can resemble a pension programme, while allowing larger withdrawals can cater to specific retirement plans such as home renovations or Haj.

"There's a need to guide EPF members in responsible financial management, considering the rising risks of financial scams.

"Monthly withdrawals not only mitigate these risks but also promote financial discipline," he said.

He added that these insights highlight the importance of flexibility in managing EPF savings, enabling members to make informed decisions in responsibly utilising their retirement assets.