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3 years ago · by · 0 comments

Majority of Malaysians do not have enough savings to retire

retirement-saving

More than three quarters of Malaysians who are active contributors to the country’s savings and retirement fund, the Employees Provident Fund (EPF), do not have enough funds in their accounts for retirement, said a senior EPF official.

Ms Balqais Yusoff, EPF head of Strategy Management Department, told national news agency Bernama that 78 per cent of the 6.7 million active contributors did not have the basic amount of RM196,800 (S$66,944.21) for their retirement. The amount was set by the EPF as a savings threshold that would allow a contributor to spend RM820 a month for the next 20 years.

Ms Balqais said 65 per cent of active contributors had less than RM50,000 in their savings. Only 22 per cent have met the RM196,800 or more threshold.

“Based on our definition of basic savings, where retirees will need at least RM820 a month in their retirement years, those who have RM50,000 in EPF can go on for only five years before their savings run out,” she said.

“That is if they live at RM820 a month. And we know that RM820 is not enough; that amount is probably sufficient for grocery shopping only and that’s the reality today.”

She attributed the problem to Malaysia’s low salary structure, noting 89 per cent of the working population earns less than RM5,000, which translates into a lower savings rate for the EPF. “In terms of contribution rates in mandatory saving, Malaysia is the world’s fifth highest, but the salary structure does not translate into a high saving number,” she said.

“So, we need to constantly review the wage structure and the minimum wage also needs to be aligned with the rising cost of living.”

EPF is a compulsory savings and retirement plan for private-sector employees in Malaysia. At least 11 per cent of an employee’s monthly salary is set aside every month in a savings account, while employers are obligated to contribute at least 12 per cent of the employee’s salary concurrently.

Malaysians can fully withdraw their retirement savings from the EPF at 55, but many people tend to exhaust their savings within three to five years after a full withdrawal. Partly because of this, the Malaysian Healthy Ageing Society (MHAS) has advised Malaysians to educate themselves on the importance of having enough savings, as well as on healthy ageing, personal care and having a good insurance policy as preparations for old age.

MHAS adviser Professor Nathan Vytialingam said the public should realise at a young age how to manage themselves before they become a burden to others in their golden age.

“The biggest challenge for us (at MHAS) is to educate people on healthy ageing, but we will not stop our efforts to encourage them to educate themselves and seek advice from experts, especially regarding financials and healthcare,” he told Bernama. “We believe by doing this, they will be prepared to age healthily and enable the elderly to age better.” Agencies

Article source: http://www.todayonline.com/world/asia/78-malaysians-do-not-have-enough-funds-retirement

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