Malaysia’s Employees Provident Fund, Kuala Lumpur, on Thursday raised the amount of “basic savings” EPF participants need to accumulate in their main retirement accounts before they can shift money into approved unit trust funds under the EPF-Members Investment Scheme.
The new increments, effective Jan. 1, 2014, aim to ensure EPF participants accumulate basic savings of 196,800 ringgit ($59,627) by age 55, enough to sustain a payout of 820 ringgit a month over the subsequent 20 years, according to a statement of the EPF’s website.
The current increments had aimed to ensure basic savings of 120,000 ringgit, with a monthly payout of 500 ringgit for the ensuing 20 years.
The latest move followed an announcement earlier this month that the age limit for employers’ full mandatory EPF contributions of 12% to 13% of employees’ monthly salaries had been raised to 60 from 55, effective immediately.
Previously, employers’ EPF contributions dropped to 50% of that statutory rate for employees between 55 and 75 years of age.
Employers contribute 13% for employees with monthly salaries of 5,000 ringgit or below, and 12% on monthly salaries above 5,000 ringgit.
Likewise, employees now have to make EPF contributions of 11% of their monthly salaries through age 60. Previously, their mandatory contributions dropped to 5.5% of their salaries from age 55.
In the EPF’s statement, the 536.6 billion ringgit retirement scheme’s deputy CEO for operations, Ibrahim Taib, noted that the extension would help members accumulate savings “in the long term for their retirement.”
The statement went on to say that, with average longevity now extending to 75 years of age in Malaysia, ensuring the adequacy of retirement savings is the EPF’s main concern.
In July, Malaysia raised the minimum retirement age for employees to 60 from 55.