There are some major developments and changes to the KWSP allocations and it’s going to really affect how you will be enjoying the fruit of your labor.
The ‘Beyond Savings’ initiative is prompted by the EPF’s desire to enhance financial security in retirement in the light of inflation, a weakening extended family system, longer life expectancy and escalating medicals costs.
“The EPF’s main concern is the adequacy of savings for members during their retirement years as the average retirement savings for EPF members currently is inadequate. With Malaysians having a longer life span as well as inflation and escalating medical costs, many members may find themselves with insufficient funds if the issue of adequacy of savings is not addressed now,� said Datuk Azlan Zainol, Chief Executive Officer of EPF
Source: KWSP’s Website
Some facts, figures and proposed implementations:
Fact 1: 98% of EPF members withdraw their money at age 55, and 80% of them exhaust the fund in just 3 years.
Fact 2: According to Azlan, there are about 4,700 members with savings of more than RM1 million.
Fact 3: As of November, EPF members can withdraw a minimum of RM2,000 at any time, at intervals of at least 30 days.
Proposed 1: To discourage lump sum withdrawals, ad-hoc withdrawals will be introduced.
Proposed 2: Allowing members to use savings in excess of the “basic sum�in Account 1 for approved investment products (February 2008)
Proposed 3: Allowing members to withdraw savings from Account 2 to purchase critical illness insurance policy for themselves and immediate members (June 2008)
Proposed 4: Allowing children to top up parents’ savings in Account 1. Spouse can do this for each other too. (June 2008)
Proposed 5: Making it mandatory for big companies (more than 1,000 staff) to contribute via electronic mode. (June 2008)
Proposed 6: It will also soon be mandatory for employees aged 55 years and above to contribute to the EPF.
Proposed 7: Allowance for members of any age whose total savings have exceeded RM1 million to withdraw an amount in excess of RM1 million at any time to invest on their own.
Proposed 8: Members must have RM120,000 in Account 1 at age 55 to be able to withdraw their savings in Account 2 (January 2013).
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