Wednesday, April 15, 2015


I think the Employees' Provident Fund (EPF) has been doing an excellent job in firstly safekeeping our retirement fund and secondly in providing probably one of the best rates of return on investments for those funds.

What the banks give as interest rates on savings are at best half of the EPF rates of return. For those retirees who are going to just rely on their retirement funds as sustenance in their twilight years, the best thing to do is to leave their money with the EPF for as long as they can (currently, 75 years of age) or until the deposit rates in financial institutions in Malaysia rise to decent rates.

Of course, there are people who have their dreams to pursue on retirement (currently 60 years of age). There is this "big" sum of money that they are going to get their hands on to "solve" all the money problems they have been having all their lives. Or, for once in their lives, they do not want to be bossed about anymore and they are going to be their own bosses. They are going to invest their own funds and set up their own businesses ("fried kway teow" stalls used to be a very common idea). Some may simply want to "take their money out" and live abroad and be done with their wonderful country which has been feeding their grandparents, parents, themselves, children and grandchildren. Everybody has dreams that the "grass on the other side is greener."

This is not the current issue. Everybody can do what they like about their own money, their "hard earned" money, money they have "slogged all their lives." The issue is whether the age for full lump sum withdrawal should be increased from 55 to 60 years of age, as this official retirement age has now been extended from the government sector to the private sector in 2013.

It is logical for EPF to consider whether this issue of raising the age of full withdrawal from 55 to 60 years of age. It is an administrative issue which needs to be addressed, whether EPF likes the idea or not.

The most logical answer is that, in line with the increase in the official retirement age for all employees in Malaysia to 60 years, according the age for the full withdrawal of EPF funds should also be on retirement on reaching 60 years of age.

But there is such a thing as "early retirement" or "optional retirement" and it is only natural that these options should be built into the scheme for full withdrawal. Nobody wants to be caught in a situation when one opts for early retirement but have no access to one's entire EPF funds.

The argument that usually the entire EPF funds upon withdrawal will be gone within three years or so. (I know of a case where the cash didn't last three months because of excitement over an investment dream.)

But this is not for EPF to impose its value judgment on the retiree. It is for the retiree to take full responsibility for his or her money.

The only thing that EPF can do in this regard over the quick disappearance of fully withdrawal EPF funds is to offer more attractive schemes for the retirees to keep their money in the EPF. If EPF is interested in doing a customer outreach or a PR exercise, it may want to put some effort in building the confidence that EPF is the best place to keep your hard earned savings, as it is safe and the returns are the best. EPF can think think more like an insurance company.

I think various schemes have been rolled out in the past and they are good. But this may be the time to overhaul the entire EPF framework to take of retirees who do not seem to be in a hurry to go. I think this is an opportunity for EPF to put its best foot forward and do real public good. There may be hope for Malaysia in EPF.


Anonymous said...

i am definitely against the withdrawal at 60 as 55 is already sufficient for e. See different people has different options. So EPF just can't lump it into one and extend the age further to 60. I am 52 years old and waiting for the 55 to go for my dream of vacation. So is EPF suggesting that i have to wait util 60 . What a bullshit..

hishamh said...


Thank you very much for covering this subject. If I can add, it's not so much regularising the withdrawal age with the official retirement age, but more the increased life expectancy of Malaysians. The 55 withdrawal age was put in place when life expectancy was just 58. Now Malaysians typically live into their mid-70s. The extra five years is critical in increasing pension adequacy.


The details of the change in scheme haven't been published yet (it'll come out next week), but at your age, you won't have to wait until 60.

walla said...

Some may say it's got to do with the lubricant viscosity. But that aside, one thinks it has everything to do with the integrity of the gasket.

If the gasket is worn out, it gets loose and water from somewhere will somehow seep into the piston chamber, corroding what is already quite old. Soon smoke belches out from the tractor and production grinds to a halt bringing stoppage to our agro-industrial revolution.

So the simple gasket is very crucial to the scheme of things.

Likewise the human sphincter. Age makes it weak from over-use. So the elderly will have loose bladders. And that can only be contained with pampers.

Whose price has shot up since all-fools day.

Therefore we may conclude many people who don't like this idea of extending the EPF withdrawal age is because they fear they may no longer be able to afford pampers five years beyond the magic age of fifty five.

Can they be blamed for being cynical about the state of the economy, you reckon?

They look around and see lugubrious chaos, breakdown of principles, friggin' but indexable double standards, and the great hero-zero-nero framework that is our socio-economic reality. Mix all these together and you get the new cocktail economics, namely privatise national wealth to a select few but socialise bailout and re-financing costs.

How not to collapse and burst already tired sphincters?

The hard earned money of faceless millions that is all to show for a lifetime work is put in black boxes privy to only a few only to be later revealed as placed in Cayman but not Labuan and then explained first that it's easier for US-denominated transactions there and later as only for registration purposes. A donkey can do better at fibbing such fab excuses.

And we are asking for EPF and other g-linked funds holders to continue to exercise faith and hope in the risk management expertise and stupendous integrity of the entire rigged system of rigmaroles when transparency is rarer than saints, corruption is more common than sinners and thuggish enforcement of status quo is made to be the acme of what has become a dictatorial democracy?

Better change the gasket.

walla said...

In the italian flick Life Is Beautiful, the husband and wife are both incarcerated in a concentration camp. Jactim will approve because they are in separate cells. The husband is good at making up puzzles and the german doctor is persistently curious about one puzzle even when the husband is begging him to try and do something for the wife. The german doctor's ears are however non-functional because his brain is the only organ working fulltime on the puzzle. His empathy died when he put on that uniform.

Why is this here, even i wonder?

Most of the EPF holders are not going to make it for long on what they have.

etheorist said...


Yes, assuming the original formula was correct. Mutatis mutandis, full withdrawal age at 69/73?

I quite like the idea of allowing funds to stay in until 100.


Keep it up!