EPF general manager for public relations, Nik Affendi Jaafar said the new rate was benchmarked against the minimum pension for public sector employees, currently at RM820 per month for a period of 20 years from the age of 55 to 75 years.
He said the rate would be reviewed every three years based on retirement needs, inflation rate and the cost of living.
"By taking into account the rising cost of living, life expectancy of Malaysians which is long and the rate of inflation, we have decided to increase the Basic Savings to ensure 13 million members have sufficient savings to enjoy a sustainable retirement," he said in a statement today.
He said the current Basic Savings of RM120,000 at the age of 55 (RM500 per month for a period of 20 years) might not be enough to cover the retirement of EPF members as it was below the poverty line income.
He said EPF statistics showed that 71% of EPF members retired at the age of 55 with savings of less than RM50,000 in their EPF account.
Nik Affendi said the revised rate required members to have higher savings in their EPF account to be eligible to participate in the EPF Members Investment Scheme where savings could be invested in unit trusts.
"This is to ensure that members have sufficient savings in their EPF account when they retire in order to support their basic retirement needs before they can choose to invest in other schemes," he said.
Among the initiatives introduced by EPF to boost members' retirement savings is an employer contribution rate of 13% for workers earning RM5,000 and below.
"Besides that, full EPF contribution rate for employees up to age 60 and flexible withdrawal at age 55 allows members to extend their savings for a longer period," he said.
To help members plan for their retirement, Nik Affendi said EPF would introduce financial advisory services for members next year with a pilot project in the Klang Valley before being extended nationwide in the next three years. – Bernama
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