WHILE the aim of the restructuring of Employee Provident Fund (EPF) withdrawals into a monthly pension-style system for retirees is to ensure they do not exhaust their savings prematurely, the policy should be approached with caution.
MCA information chief Chan Quin Er was responding to Prime Minister Datuk Seri Anwar Ibrahim’s announcement while tabling the 13th Malaysia Plan (13MP) on July 31.
Under the 13MP, the proposed mechanism seeks to ensure a steady post-retirement income by splitting EPF contributions into two components: one for lump-sum savings and another for monthly pension payouts.
“While the aim of this proposal is to ensure that retirees do not exhaust their savings prematurely and thereby safeguard their long-term financial security, particularly in light of the rising cost of living and increasing life expectancy, such a policy however, if implemented universally, should not be unilaterally imposed on existing contributors and must be approached with caution, particularly if it will be a policy applicable to new contributors,” she warned.
Chan said a mandatory monthly pension mechanism may unintentionally disadvantage contributors who have immediate financial needs upon retirement.
“Many retirees may require access to a lump sum to settle outstanding debts like settling housing loans, pay for significant medical treatments such as organ transplants or cancer treatment, invest in caregiving services or support important life transitions such as relocating or helping their children financially,” she said.
“Denying access to the contributors’ full savings without flexibility could place them in financial hardship, despite having contributed diligently throughout their working lives.”
Enhancing financial literacy
Continued Chan, enhancing financial literacy must be a parallel priority as a one-size-fits-all solution does not reflect the diverse financial circumstances and priorities of Malaysian workers.
She said rather than enforcing a rigid withdrawal structure, the EPF and the government should significantly invest in financial education programmes that equip contributors with the knowledge and tools to plan their retirement wisely.
“Through targeted outreach, workshops and digital tools, EPF can help contributors evaluate the pros and cons of different withdrawal options based on their lifestyle, health, obligations, and retirement goals,” she reckoned.
“Empowering individuals with financial knowledge is a more sustainable way to prevent premature depletion of savings than restricting access to them.
“Therefore, MCA strongly urges the government and EPF to preserve contributors’ freedom to choose between a lump sum withdrawal, discretionary figure to be arranged with EPF, monthly payments or a combination.”
Describing retirement as a deeply personal journey, Chan said financial planning must reflect that reality, and contributors should be trusted to make informed decisions about their own futures with the support and guidance of comprehensive financial education and not through “enforced restriction”.
“As RMK13 continues to be developed and refined, MCA reiterates our support for meaningful reforms that strengthen retirement security but not at the expense of personal agency and flexibility,” she added. ‒ Aug 4, 2025
Main image: Reuters/Lim Huey Teng
