The Employees Provident Fund (EPF) is making major adjustments to its retirement savings framework, aimed at giving members more flexibility while safeguarding long-term financial security. Starting in 2026, the threshold for “excess savings” will rise to RM1.1 million, compared to the current RM1 million. This will move up again to RM1.2 million in 2027 and RM1.3 million in 2028.
What this means is simple: any balance above these limits is considered excess, and members will be allowed to withdraw it. The “core” amount beneath the threshold remains untouched, ensuring that retirees keep a sufficient base for their later years. EPF explained that the move is designed to keep up with rising living costs and longer life expectancy, while still balancing flexibility with protection.
Malaysians Are Saving More Than Before
The timing of these changes comes as more Malaysians are proving that they are taking retirement planning seriously. EPF data shows a clear upward trend:
- 42 per cent of members aged 51–55 had achieved the Basic Savings benchmark in 2024, compared to only 36 per cent in 2022.
- Average savings for the 50–54 age group rose from RM265,788 in 2022 to RM308,644 in 2024, comfortably above the minimum target set for 2026.
This steady improvement has been credited to both policy reforms and stronger member contributions. A key step was the May 2024 account restructuring, which increased the share of monthly contributions channelled into the Retirement Account from 70 per cent to 75 per cent. This shift gave members a stronger long-term foundation.
Another important factor is the rise in voluntary savings. Voluntary contributions jumped by 62 per cent in 2024, showing that Malaysians are becoming more proactive in topping up their accounts. Programmes like i-Saraan (for self-employed workers) and i-Suri (for housewives) are attracting more participation. In the formal sector, the Voluntary Excess programme has also gained momentum: in just the first half of 2025, 34,442 members contributed above the statutory rate, nearly double the 19,591 recorded the year before.
These figures suggest that the culture of voluntary saving is finally taking root in Malaysia. EPF, in a statement to Malay Mail, emphasised: “This overall improvement has been driven by both policy enhancements and stronger contributions.”
EPF to Raise Basic Savings Target
At the same time, EPF is raising the bar for Basic Savings under its new three-tier Retirement Income Adequacy (RIA) framework. This benchmark represents the minimum amount a member should have by retirement age to cover basic needs.
- RM290,000 by January 2026
- RM340,000 by January 2027
- RM390,000 by January 2028
With RM390,000 at age 60, EPF estimates a member could take out RM1,625 per month in the first year of retirement, gradually rising to RM4,434 per month by year 20. This projection accounts for inflation and assumes savings are left to grow within EPF during retirement.
However, in the early years, RM1,625 per month may fall short of the estimated RM2,690 monthly cost of living that a single elderly Malaysian needs for a modest retirement. This gap is a reminder that voluntary top-ups, employer contributions above the statutory rate, and personal investments remain essential if Malaysians want more comfortable golden years.
EPF Exploring Monthly Withdrawals System
Looking ahead, the government is exploring whether EPF withdrawals should evolve into a more structured, pension-style system. Prime Minister Datuk Seri Anwar Ibrahim, when tabling the 13th Malaysia Plan (RMK13), proposed introducing a two-account system for new members:
- Flexible Savings – withdrawable at any time.
- Income Savings – paid out regularly, likely monthly, until fully used up.
Deputy Finance Minister Lim Hui Ying explained that this system would create balance: it allows some immediate access while ensuring members do not outlive their savings.
Experts have welcomed the idea. Dr Azmi Hassan, a senior fellow at the Nusantara Academy for Strategic Research, noted: “A monthly withdrawal system would act like a pension, providing a predictable and stable income rather than leaving retirement security to individual spending habits.”
EPF has been careful to stress that no such changes are confirmed yet, and any restructuring will only be introduced after thorough study and consultation.
The Bigger Retirement Picture
Malaysia’s demographic landscape is changing fast. With life expectancy now stretching beyond 75 years, many Malaysians will face 20 years or more of retirement. The challenge is ensuring that savings last through these longer lifespans.
The changes announced by EPF highlight a clear shift: retirement is no longer just about building a lump sum; it’s about ensuring steady, sustainable income for longer lives. Raising the excess savings threshold gives flexibility, increasing the Basic Savings target raises standards, and the possibility of monthly pension-style withdrawals points toward more stability.
For Malaysians, the message is simple: saving early, saving more, and saving consistently is more important than ever. With inflation and rising costs of living, relying only on the statutory minimum is unlikely to be enough. Voluntary contributions, careful planning, and financial literacy will play an increasingly vital role in securing golden years that are not just long, but also comfortable and dignified.
Source: 1| 2| 3
Related articles:
6.3% EPF Dividend Sounds Great, But Will It Secure Your Future?
EPF Says You Can Save RM1 Million with Just RM1,700 Salary
Discussion about this post