KUALA LUMPUR - Malaysia's low-wage structure is a significant factor behind the Employees Provident Fund's (EPF) inadequate savings.
EPF chairman Tan Sri Mohd Zuki Ali said irregular contributions, particularly among those in informal or gig economy roles have exacerbated the situation.
"The growing shift towards informal work has led to fewer individuals accessing formal retirement savings schemes such as the EPF.
"Compounding this is the relatively low level of financial literacy, which limits people's understanding of the importance of saving and retirement planning," he said in his welcoming remarks for Financial Literacy Month 2024.
It was reported that the government has stepped up to improve wages following the implementation of the Public Service Remuneration System (SSPA) which will replace the Malaysian Remuneration System (SSM) effective Dec 1, 2024.
Under SSPA, there will be a 15 per cent salary adjustment for civil servants in the Implementing, Management and Professional groups, and seven per cent for those in the top management group.
Before this, the government also raised the minimum wage to RM1,500 per month in 2022 from RM1,200 per month in major cities, and RM1,100 in other parts of Malaysia in 2020 to help address the rising cost of living and improve the financial situation of low-wage workers across the country.
In his remarks, Mohd Zuki said the Financial Education Network's National Strategy for Financial Literacy has reported that 41 per cent of Malaysians rely on EPF savings as their primary retirement income.
However, only 34 per cent of active members under 55 have met what is called the Basics Savings Quantum, indicating that many remain unprepared for retirement as of June 30, 2024.
He said currently, only 29 per cent of the elderly population receives a monthly pension, primarily from the Civil Service Pension Scheme and assistance programme like Bantuan Warga Emas.
"This leaves the remaining elderly population dependent on either EPF savings, personal savings, family support, or continued employment to meet their living expenses in old age," he said.
He added that a Credit Counselling and Debt Management Agency (AKPK) survey has revealed that many workers under 40 are not actively saving for retirement, as they tend to prioritise immediate financial needs over long-term security.
Consequently, according to the Malaysia Ageing and Retirement Survey, 26 per cent of respondents stated they expect to continue working until their health no longer permits them to do so, he said.
Hence, he said financial literacy is key to advocacy efforts, helping individuals make informed, long-term financial decisions for retirement.
"To support this, EPF has expanded its reach, providing tools, education, and guidance to build a secure future," he said. - BERNAMA