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Tuesday, November 13, 2018

EPF Increases Minimum Basic Savings to RM240,000 At Age 55 Effectively Starting 2019

The Employees Provident Fund (EPF) has announced that the basic savings at age 55 will be increased from RM228,000 to RM240,000 effective Jan 1, 2019. The increment will also be made across all ages accordingly, refer to the table below. 


EPF last revised the amount back in Jan 1, 2017 from RM196,800 to RM228,000 (read here). Given that Malaysian has not saved enough for retirement, EPF further increases the basic savings. 




What is Basic Savings?
The basic savings is a pre-determined amount set according to age in Account 1 to enable members achieve a minimum savings at different age, for example, when they reach age-55, they should have at least RM240,000 to retire. The amount in excess of the Basic Savings can also be invested in products offered by appointed Fund Management Institutions approved by the Ministry of Finance.


Why Do I Need That?
The rationale for the implementation of this basic savings is to ensure that members have sufficient savings when they retire in order to support their basic retirement needs for 20 years from age 55 to 75, in line with Malaysians' life expectancy. The new quantum is bench-marked against the minimum pension for public sector employees, which has been raised from RM950 to RM1000 per month from age 55 to 75. (I don't think RM1000 per month is enough either!)


How Does It Affects Me?
Well, it doesn't if you did not opt to withdraw for the Members Investment Scheme (MIS). But if you do, then the withdrawal amount for MIS will be reduced




Conclusion:
With the increment in Minimum Basic Saving, members can now withdraw lesser money, so that you have more money at retirement!


To find out more about it, feel free to contact #YourFinanceDoctor at henrytcx@gmail.com
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4 comments:

  1. Replies
    1. actually it is for employees before retirement.. because it affects the money they can withdrawn to invest. ;)

      Delete
  2. Is it 20% or 30%?

    ReplyDelete

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