KUALA LUMPUR – The Malaysian Financial Planning Council (MFPC) has supported the government’s decision not to allow further Employees Provident Fund’s (EPF) withdrawal schemes.
In a statement on January 10, MFPC said it strongly supports initiatives to encourage and offer incentives for long-term saving through its Private Retirement Scheme (PRS), which will help ameliorate the issue of insufficient retirement funds.
The mandatory EPF contribution represents the main pillar in the citizens’ financial old age security, with more than 14 million Malaysians relying on EPF as their retirement safety net.
“The approach of using EPF savings for emergency needs will certainly cause a severe impact as members would face very low savings in their retirement years, compounded by other uncertainties such as rising healthcare costs.
“The issue of insufficient savings is alarming as the median savings of the B40 were at RM1,000. If this level continues until their retirement, they would have only RM4 a month to spend for 20 years, and for the M40, their savings of RM25,000 would translate into RM104 a month for the same period,” it said.
The MFPC 2020 national survey on Financial Capability and Utilisation of Financial Advisory Services in Malaysia revealed that a large number of Malaysians generally have a low financial capacity, do not know how to manage their money, and do not plan and save.
In addition, poor financial literacy among Malaysians is one of the main reasons for low savings of around 36%.
“Cognisant of the challenges, we are at the forefront of raising Malaysians’ financial literacy. This reflects our corporate social responsibility and initiatives to meet the crucial need to elevate financial knowledge among Malaysians.
“Our various year-round programmes in financial planning devoid of any element of commercialisation or payment for Malaysians of various ages and backgrounds attest to this.
“We are extremely heartened the programmes have been very well received with extremely encouraging participation and have benefitted at least 500,000 Malaysians nationwide since we first conducted them in 2007,” it said.
MFPC urges financial institutions to upgrade their financial intermediaries, including bankers, unit trust consultants, and insurance agents in professional knowledge and skills to provide Malaysians with critically-needed retirement planning advisory services.