Old Age Support for Private Sector Employees in Malaysia: Can the Employees Provident Fund Do Better?

Abstract

The Employees Provident Fund of Malaysia is the largest provident fund scheme available to private sector employees. This paper argues that with the low retirement age, the trend towards population ageing, a longer life expectancy and the erosion of the informal safety net for the aged, the Fund's protection is becoming inadequate. This is aggravated by the fact that many permitted pre-retirement withdrawals undermine old age savings and the Fund's returns on investments are declining. To upgrade protection, the Fund must minimize pre-retirement withdrawals, revamp its investment and portfolio strategies and be supplemented by other measures including capital market reforms.