EPF to ramp up retirement adequacy and voluntary contributions efforts in Malaysia

As at H1 2023, EPF said it recorded a total of 15.90mn members. Out of that amount, the EPF said it reached an "all-time high" of 8.47mn active members.

Malaysia's Employees Provident Fund (EPF) recorded a total investment income of RM33.19bn for the first half of the year ending 30 June 2023 (H1 2023), marking a growth of RM9.44mn from the RM23.75bn recorded in the corresponding period in 2022.

The amount, EPF shared, was obtained after netting off listed equity write downs recorded for the period under review. Out of the total RM33.19bn investment income, RM4.79bn were generated from mark-to-market (MTM) gains of securities that have not been realised. The MTM gains were mainly due to the fluctuation of foreign exchange rates.

Breaking it down further, EPF’s total investment income for the second quarter (Q2 2023) was RM18.03bn — up RM9.05bn from RM8.98bbn recorded in the same quarter last year. Equity investments continued to be the main contributor of income for Q2 2023, making up RM9.60bn of the total. In comparison, the asset class generated RM4.07bn of income in H1 2022. 

Datuk Seri Amir Hamzah Azizan, Chief Executive Officer, EPF, commented: “The performance of the global equity markets in the first half of 2023 had been positive, led by a run-up in the developed markets, notably in the US which continues to show resilience despite the rise in interest rates.

“For Malaysia, the 5.6% GDP growth in the first quarter of 2023 had surpassed expectations, driven mainly by firm domestic demand and improvement in the labour market. Resilient growth tempered tighter financial conditions, providing a floor for the domestic capital markets.”

Fixed income instruments, comprising Malaysian Government securities and equivalents, as well as loans and bonds, contributed 27% or RM4.83bn, to EPF’s total investment income for Q2 2023. 

Meanwhile, the EPF’s domestic investments, which accounted for 61.4% of total assets, has also grown by RM57bn compared to one year ago.

"All-time high" of 8.47mn active members in H1 2023

As at H1 2023, EPF said it recorded a total of 15.90mn members. Out of that amount, the EPF said it reached an "all-time high" of 8.47mn active members. For some perspective, this represents 50.2% of Malaysia’s 16.86mn labour force. There was an increase of 467,087 in active members, from 8mn in the first half of the previous year to 8.4mn in H1 2023.

There was also a strong growth of 43,084 in employer registrations during the period, bringing the total number of employers registered with the EPF to 598,871. The increase of active members and employers translated into strong growth of contribution amount of RM50.48bn in H1 2023, an increase of 16.8% from RM43.23bn in H1 2022, EPF shared.

With an ever-growing shift towards informality and the emergence of the gig economy, the EPF is focused on widening its reach moving forward by actively deploying its mobile units to reach out to potential members to register with the EPF. As at June 2023, a total of 4,429 outreach activities were conducted.

Ramping up on voluntary contributions and widening coverage

The benchmark the EPF uses to determine Basic Savings achievement by age is RM240,000, which serves as the minimum target upon reaching age 55. This translates to RM1,000 per month over a 20-year retirement period. Understanding this helps to gauge the adequacy of retirement income,

EPF also notes the issue of savings adequacy impacting EPF members’ wellbeing as they transition into their golden years. In response, it will ramp up on its Jom Tambah campaign to encourage members to voluntarily top-up their savings.

In H1 2023, the EPF recorded a 36% growth in the number of voluntary contributors to 535,307 from 393,966 in H1 2022. Total contributions accumulated was RM3.93bn in H1 2023, an increase of 46% from the RM2.70bn accumulated in the corresponding period last year.

Meanwhile, the number of formal sector members who opted to contribute more than the statutory rate was 31,128 in H1 2023, a significant increase compared to 9,765 in H1 2022. The EPF is also actively reaching out to employers and strongly encouraging them to consider contributing more than the statutory rate of 12% or 13% (for employees earning RM5,000 per month or below). 

The EPF also provides access to other products to enhance income security such as i-Sayang, a facility to enable husbands to voluntarily transfer a portion of their EPF monthly contributions to their wives account.

According to the EPF, such initiatives contribute significantly to the overall goal of fostering a financially resilient and protected community. 

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