Help is at hand
Utilise the Employee Provident Fund’s advisory services to plan and save for your golden years.
SENIOR marketing executive Alila Muhammad did not know how much she could accumulate in her Employees Provident Fund’s (EPF) savings account till she sat down with the fund’s Retirement Advisory Services (RAS) officers recently.
“It was a pleasant surprise to find out that I will have over RM1mil after I’m 55 ... that is if I don’t make any withdrawals any from my Account 2 (permitted for down payments or loan settlements, finances for education and medical expenses) in the next 14 years.
“The old adage sikit sikit, lama jadi bukit (mighty oaks from little acorns grow) certainly holds true when it comes to financial management,” said Alila, 41, who earns over RM6,000 a month.
Thanks to the advisory session, Alila is also scrutinising her withdrawals from her EPF Account 1, which she had invested in unit trust over the past six years.
She is learning to compare her returns from her unit trust investments to EPF dividend rates. After her consultation with EPF, she realised that financial literacy is crucial in deciding on her investments.
RAS - launched in 2014 – is an EPF initiative to enhance member’s awareness on the importance of retirement planning.
The service is the first of its kind introduced in Southeast Asia. It is to guide EPF members to make informed decisions before making withdrawals from their retirement fund, said RAS advisor Nornisah Mohd Yusof.
“The service is available to educate members on ways to manage retirement savings and create a sustainable monthly income which can support their lifestyle throughout their golden years,” she added.
RAS was created as 65% of EPF members (age 54 years and above) have less than RM50,000 in their savings.
“Studies show a large percentage of EPF members tend to exhaust their savings within three to five years after retire- ment (at 55 years old or 60 years old). However, life expectancy of Malaysians is estimated to be 75 years, so many members do not have sufficient funds for their twilight years,” said Nornisah, advising EPF members to accumulate a minimum of RM228,000 by the age of 55.
The 2015 EPF annual report states that about 80% of its active members have an average savings of RM100,000 and less, which is not enough for their retirement needs. Most EPF members find it difficult to manage their funds due to inadequate financial and retirement planning, said Nornisah.
She advised Malaysians to save for rainy days and resist making impulsive purchases.
“It’s your hard-earned money, so save wisely. It’s never too early to start thinking of financial planning. Fresh graduates are encour-