KUALA LUMPUR: Lower starting salaries for those who began their careers before the implementation of the minimum wage in 2013 are among the factors contributing to low Employees Provident Fund (EPF) savings that are typically below RM10,000 among members aged between 40 and 54 years.
In a statement yesterday, EPF said another factor was structural wage challenges, whereby 44% of EPF contributors earn less than RM2,000 and 81% of them have an income of less than RM5,000.
“Also, inconsistent contributions that were due to members shifting in and out of the formal sector. Only 45% of the 4.81 million members in this age group made contributions in 2022, while the rest did not contribute at all last year.
“Only half of the private sector labour force, who are under formal employment contracts, are mandated to contribute to EPF, and the remaining comprises individuals in other sectors, such as agriculture or informal work, or contract workers and business owners,” said the statement.
The other factor is that 59% of the 2.85 million members in this age group applied for Covid-19 related withdrawals and withdrew more than RM62bil in total.
As at the end of December 2022, there were 4.81 million EPF members in the 40-54 age range, with 2.17 million of them being active members and the remaining 2.64 million being inactive members (defined as having made no contributions in the past year).
EPF, meanwhile, welcomes the government’s move to contribute RM500 on a one-time basis to the accounts of both active and inactive members to encourage more Malaysians to increase their retirement savings.
This incentive will serve as a catalyst for members to rebuild their savings and achieve a dignified retirement, which in turn will help mitigate the impact of Malaysia’s rapidly ageing population, it added.
Prime Minister Datuk Seri Anwar Ibrahim, when tabling Budget 2023 on Feb 24, said the government had agreed to inject RM500 into Account 1 for EPF members aged between 40 and 54 years with less than RM10,000 in savings. — Bernama
