PETALING JAYA: The recommendation by the World Bank to increase the Employees Provident Fund (EPF) withdrawal age from 55 to 65 years should not be cast aside completely, although some experts question whether it is suitable for Malaysians.
Sunway University director of the Economic Studies Programme Prof Yeah Kim Leng said the recommendation is worth considering given that the retirement age has been raised to 60.
“Contributors who are still employed and receiving wages may be prone to imprudent or excessive spending if allowed full withdrawal five years before retirement.
“Special needs whereby the withdrawals will enhance their financial well-being without compromising their retirement needs, such as paying off mortgages or investing in an annuity that provides greater security during old age, can be looked into by the EPF,” he told The Star yesterday.
However, he added that the EPF would need to mount engagement sessions and gather feedback from contributors.
On Thursday, the EPF stated that it took note of the World Bank’s suggestion but had no plan to increase the withdrawal age for contributors, as every major policy is addressed in a prudent manner.
Prof Dr Chung Tin Fah of HELP University said the World Bank’s proposal to gradually raise the age of EPF members’ full withdrawal is aligned with an ageing population scenario where the retirement age may be raised.
“Many countries have already raised their retirement age and will continue to do so for those who are healthy and willing to work.
“A productive workforce is better than just being dependent on a narrow workforce defined by age. This cannot be done without also raising the retirement age,” he said.
Chung believes that gradually raising the withdrawal age is a good way to avoid panic.
He added that EPF, as a responsible institution, could not raise the age requirement unilaterally without prior approval from the government and other stakeholders.
However, Malaysia University of Science and Technology (MUST) economics professor Geoffrey Williams said the current policy of the EPF should be retained and any changes should be made as part of a full review of the pension policy.
“This should cover EPF and all other pension offers.
“Many people have made plans to withdraw at the age of 55, possibly to transfer into other, better investments,” he said.
Williams also argues that the World Bank’s approach of working longer and saving more does not work in the Malaysian context.
