KUALA LUMPUR – The Employees Provident Fund (EPF) will revise upwards the Basic Savings quantum — the minimum target savings that its members should have when they reach 55 — from RM196,800 to RM228,000 effective Jan 1, 2017.
The fund said in a statement that accordingly, members would now be required to have higher savings in their EPF account in order to be eligible to participate in the EPF Members Investment Scheme (EPF-MIS).
The Basic Savings refers to the amount that is considered sufficient to support members’ basic retirement needs for 20 years from age 55 to 75 aligned with the Malaysian life expectancy.
The new quantum is benchmarked against the minimum pension for public sector employees, which has been raised from RM820 to RM950 per month from age 55 to 75.
Based on EPF’s table, at age 30, the Basic Savings should be RM29,000; at age 40, it should ve RM78,000; and at age 50, RM165,000.
EPF head of corporate affairs department Nurini Kassim said the EPF Basic Savings quantum was revised periodically according to the minimum pension for public sector employees, or every three years, whichever is earlier, with the last revision having taken effect in 2014.
“In view of the escalating cost of living, longer life expectancy and higher inflation rate, the EPF has made the decision to revise the Basic Savings upwards to RM228,000 from RM196,800,” she said.
On the EPF-MIS scheme, Nurini said it provided members with an option to enhance their retirement savings through placing a portion of their EPF savings in Account 1 to be invested in unit trust funds or via private mandate managed by the appointed fund managers institutions (FMI) under the EPF-MIS.”
Nurini said the Basic Savings would be used as a guide for members to determine the amount permitted to be transferred for investment under the scheme.
Efective Jan 1 next year, the eligible amount members will be allowed to invest under the EPF-MIS has been increased to up to 30% in excess of their Basic Savings from Account 1, from the current 20%.
“Before participating in the scheme, EPF members should read the prospectus and disclosure documents to fully understand the investment product and should consult professional financial advisors. Members with i-Akaun can also refer to the EPF-MIS Information Portal for details on unit trust funds offered under the scheme, as well as the FMIs managing these unit trust funds,” said Nurini.