PM Anwar warns against further EPF withdrawals as only 38% of contributors meet basic savings, while KWAP returns fall short of RM45 billion pension costs
PETALING JAYA: Only 38% of Employees Provident Fund (EPF) contributors have reached the Basic Savings level for their age, while Retirement Fund (Incorporated) (KWAP)’s returns remain insufficient to cover Malaysia’s long-term pension costs, Prime Minister Datuk Seri Anwar Ibrahim said today.
Anwar said the low proportion of contributors meeting the savings benchmark was worrying and ruled out further easing EPF withdrawals, warning that it would undermine their financial security after retirement.
“I do not intend to support measures to make withdrawals easier because this would affect contributors’ interests in the long term,” he told the Dewan Negara.
The warning came as Senator Mohd Hasbie Muda raised that Malaysia’s annual pension obligations were approaching RM45 billion, despite KWAP recording RM12.9 billion in profit and growing to four times its original fund size since 2007.
Hasbie had asked asked when KWAP’s investment returns could fully finance pension payments without continued reliance on government funds.
Anwar said KWAP’s strong returns had yet to match the scale of the country’s long-term pension commitments.
“Although the profits are substantial and reach tens of billions of ringgit, they are still unable to cover the long-term cost of pension requirements,” Anwar said.
“We also have to deal with demands from some quarters for retirement savings to be withdrawn more easily.
“We remain cautious because, although some flexibility has been provided for needs such as illness or urgent education expenses, contributors must understand that these savings are meant to guarantee their future after retirement.”
Anwar said claims that EPF funds could not be withdrawn were untrue, as contributors already had access to part of their savings through the restructured account system.
“The funds can be withdrawn. For example, 10% is placed in Akaun Fleksibel and can be withdrawn without conditions because it is the contributor’s own savings.
“Another 15% is placed in Akaun Sejahtera, with withdrawals allowed for purposes such as education and performing the haj. We have provided flexibility for all of these.
“There are those who say the funds cannot be withdrawn. That is ordinary political rhetoric and it is not true.”
Anwar said the government must balance contributors’ immediate financial needs against the need to protect them after reaching the age of 60 or 65.
He added that Malaysia had recognised the pension-funding challenge more than 20 years ago, including during his earlier tenure as Finance Minister.
“More than 20 years ago, including when I was Finance Minister, we had already identified that financing the pension fund would become a major problem for the country.
“Addressing this requires political resolve to make the necessary changes while safeguarding the interests of civil servants and workers, as well as taking into account the country’s financial capacity.”
