Friday 29 Mar 2024
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epf_shahril_21apr15KUALA LUMPUR: The Employees Provident Fund (EPF) has proposed two withdrawal options for its members to consider for the next two weeks starting today. This follows the public backlash on the provident fund’s proposal to raise the age for full withdrawal of savings from 55 years old to 60.

At a briefing yesterday, EPF chief executive officer Datuk Shahril Ridza Ridzuan introduced four key areas of improvement and enhancements to the current EPF schemes.

The two options fall under the first initiative which is to align the full withdrawal age with the minimum retirement age as determined by the government.

“When we look at the full withdrawal age which today is 55 against the retirement age of 60, which is defined by law, there are several approaches to this and we are asking for a public consultation on this for members to look at these two different proposals,” said Shahril.

He said that the first option is a gradual alignment of full withdrawal to the minimum retirement age.

“What the proposal entails is that there will be a one-year shift in the full withdrawal age every three years so that gradually over time it will reach the full withdrawal age of 60, roughly in the year 2031.

“The intention of this is to have a gradual shift so that members will not be affected as some may already have plans to utilise their money in their accounts,” he said.

Under this proposal, Shahril said, members aged 52 and above will not be impacted and will be able to withdraw at the age of 55. Members aged 43 and below will have a retirement withdrawal age of 60 which is aligned to the completion date of the proposal in 2031. (See chart)

Under the second option, the EPF has proposed to maintain the age of withdrawal at 55 years old, with withdrawals either in full, partial or on a monthly basis. Should members choose to continue working after 55, new contributions will be placed in a new separate account which can be withdrawn at 60.

Apart from that, the second initiative aligns minimum contributions with the minimum wage legislation. Shahril said that if the minimum wage in Peninsular Malaysia is RM900, contributions to the EPF will be calculated based on that amount, irrespective of the employers’ definition of RM900 minimum salary, as some include allowances and benefits in the amount.

The EPF’s third initiative will see an extension for its members to keep their accounts and still receive dividend payments up to the age of 100. Members would also be able to continue making withdrawals in accordance with the current policy.

Shahril noted that the EPF will not be making any changes to the withdrawal age of 50 (savings from account 2) or any other scheme such as withdrawal for housing, education and medication.

The EPF’s fourth initiative will see the introduction of syariah-compliant retirement savings in addition to the existing retirement savings scheme. Members will be given the option to switch to syariah-compliant retirement savings when the initiative takes off.

Shahril added that these new proposals are being made to increase EPF members’ savings and contributions by lengthening the accumulation phase for their retirement savings as well as an introduction of minimum contributions.

EPF members can provide input and comments on the proposals and options on www.kswp.gov.my from today onwards. Input and comments could also be made through EPF members’ i-Akaun.

“We are leaving it on the website for the next two weeks for members to get back to us ... After getting the feedback we will then table it to our board and make further recommendations to the government,” said Shahril, adding that if all goes well full implementation will take effect by year-end.

Separately, when asked whether the EPF will be purchasing assets or disposing of any of them, Shahril quipped: “Our policy is not to tell what we intend to buy or sell because it will affect what we want to buy or sell.

“Our business to buy or sell assets will be determined by what we think is the right value to acquire the asset or the right time to sell an asset.”

Shahril said the EPF’s disposal of One Sheldon Square was done at the best possible valuation in the history of London. “We seized the opportunity to make a big profit that will be used for future investments.”

The EPF announced the sale of One Sheldon Square in London to British Land Company plc for £210 million (RM1.08 billion) last week. The property was purchased for £156 million in 2010.

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This article first appeared in The Edge Financial Daily, on April 21, 2015.

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