Retirement Savings Investment Decisions: Evidence from Malaysia

Abstract

This paper investigates individual retirement savings investment choices of members of Malaysia’s Employer Provident Fund (EPF). The focus is on the option available to EPF members to invest part of their savings in approved unit trusts. A survey of EPF members allows a contrast with existing empirical evidence, largely drawn from developed countries. Three significant factors are identified: perceived importance of financial advisor; financial risk tolerance; and perceived plan design. Gender and marital status were also significant predictors of investing in the unit trusts, though religion and religious commitment were not significant. Several implications emerge from these findings. First, results highlight the important role of unit trust consultants in individuals’ choices which in turn highlights the important role of the governing body of consultants in ensuring appropriate advice is delivered to clients. The study is relevant to the EPF as policy maker, on the behaviour and attitudes of its members.