EPF chief executive officer Ahmad Zulqarnain Onn said the RIA’s recommended savings levels are from a single-tier savings benchmark to a three-tier savings framework.
The three-tier savings are Basic Savings and Income, covering essential retirement needs; Adequate Savings and Income, providing a reasonable standard of living during retirement; and Enhanced Savings and Income, supporting greater financial security and independence for a higher quality of life.
Ahmad Zulqarnain said that effective January 2026, the RIA framework allows members to set savings targets that reflect different retirement lifestyles and aspirations.
“This approach emphasises the importance of viewing EPF savings as a source of ongoing income, helping members to understand savings they will need to sustain themselves during retirement,” he said during the Special Editors Briefing on Belanjawanku 2024/2025 and Retirement Income Adequacy (RIA) Framework today.
He said the RIA Framework focuses on the concept of both savings and retirement income security.
“Based on the Belanjawanku 2024/2025, a single elderly person requires approximately RM2,690 monthly (Adequate Retirement Income) to maintain a reasonable standard of living in retirement,” he said.
The new framework will be anchored on the Adequate Retirement Income as determined by Belanjawanku from time to time, adequate savings set at 240 times the Adequate Retirement Income, rounded down to the nearest RM10,000 (RM650,000).
Meanwhile, basic savings at 60 per cent of adequate savings amount to RM390,000 and enhanced savings at two times of adequate savings amount to RM1.3 million.
“The framework encourages a monthly drawdown for 20 years, aligned with average life expectancy in Malaysia,” he said.
To illustrate, he said, the different levels of savings will translate into Adequate Savings (RM650,000) that enables monthly withdrawals starting at RM2,708 in year one, growing to RM7,389 by year 20.
Meanwhile, Basic Savings (RM390,000) supports monthly withdrawals of RM1,625 in year one, growing to RM4,434 by year 20 and Enhanced Savings (RM1.3 million) provides monthly withdrawals of RM5,417 in year one, increasing to RM14,779 by year 20 for a more comfortable retirement.
Hence, he explained that the new Basic Savings benchmark of RM390,000 represents an increase from the previous RM240,000.
“To phase the transition, the Basic Savings amount will increase gradually by RM50,000 annually over three years, with RM290,000 by Jan 1, 2026; RM340,000 by Jan 1 2027 and RM390,000 by Jan 1, 2028,” he said.
He also said RIA savings levels will be reviewed every three years, starting in 2029, using updated data from the Belanjawanku findings to remain relevant to rising costs.
He mentioned that the withdrawal policy for savings above RM1 million will align with the Enhanced Savings benchmark, offering members flexibility in managing their surplus funds.
“Additionally, under the Members’ Investment Scheme (MIS), members can transfer 30 per cent of savings above the Basic Savings amount in the Retirement Account to approved funds managed by Fund Management Institutions premised on the New Basic Savings effective Jan 1, 2026,” he said.
As of October 2024, around 36 per cent of active formal EPF members meet the existing Basic Savings level according to age, anchored on RM240,000 at age 55.
“While this percentage may be impacted with the new benchmarks in the medium term, the adjustments are essential to help members' savings keep pace with the rising cost of living and the current retirement age in Malaysia,” he pointed out.
By offering a comprehensive view of monthly expenditure and introducing new savings benchmarks, he said EPF aims to guide the members toward achieving a dignified and fulfilling retirement.
“Our goal is to ensure that no Malaysian is left behind in planning for a secure and meaningful future,” he added.
The Belanjawanku 2024/2025 could be downloaded for free from the EPF website at www.kwsp.gov.my.
— BERNAMA
