One consultant said RM100,000 in EPF savings was insufficient to fund a leisurely retirement. — Reuters pic
KUALA LUMPUR, Jan 12 — Retirement must be the sweetest moment for any
employee who has worked for over 20 years as it will allow them to rest
and do leisure activities with their loved ones.
However, inadequate retirement funds may bring these dreams crashing
down as some may continue to work following failure to manage their
Employees Provident Fund (EPF), the only retirement scheme in the
country.
According to studies conducted by the EPF, 70 per cent of inactive
contributors had retirement savings of below RM50,000 and will spend it
within the first five years of retirement.
Without financial stability from personal saving, pension or children
to support them, this situation could put many retirees in a troubling
position.
According to EPF’s senior public relations manager Nik Effendi
Jaafar, the EPF hoped to increase their members’ saving with the
introduction of the minimum wage.
“The main contributing factor for this situation is that low income
earners will contribute a small amount into their EPF until their
retirement age.
“We hope the minimum wage implemented this year will increase member contributions,” he told Bernama here today.
However, he said the EPF would like to remind its members that their
responsibility was to provide basic financial security for retirement
but there was a possibility that the funds would not be sufficient for
their needs.
Therefore, he said members were encouraged not to depend entirely on
their EPF savings by choosing other investment options to increase their
savings.
“In addition to that, to avoid reducing their EPF savings, members
should only make pre-retirement withdrawals only when necessary. More
importantly, we emphasise that a comfortable retirement is possible
through sound financial planning,” he said.
Malaysian Government Pensioners Association (PPKM) president Datuk
Wan Mahmood Pawan Teh said a panel to provide financial management
courses to future retirees should be set up to help them save more and
manage their money well after retiring.
“For example, there are suggestions for contributors to invest in
asset management companies, but the government has not provided detailed
information to them so that they are not exposed to risks or fraud.
“Not all contributors, including from the private sector, can manage
funds well. So we want contributors to understand the way to save,
invest, set up business and spend in time for their retirement,” he
said.
Independent financial consultant Fiona Tahir said, at the age of 55,
even if a person receives more than RM100,000 in EPF funds, they still
cannot live comfortably.
The best way is to have other forms of saving and to invest at least 10 per cent of the net monthly salary.
“Saving up through normal saving with low return is useless. Savings
must be invested in an instrument that yields higher returns than the
inflation rate,” she said.
Therefore she advised EPF contributors to invest in unit trust as it was capable of increasing retirement saving with low risk.
“However, we must remember that unit trust is a long-term investment
for financial planning during retirement, children’s education, or for
emergency matters especially health-related,” she said.
She said each investment, including property, gold and more also had
risks and each individual needs to have savings or investment other
than EPF to face retirement.
She added that the public should not get involved in suspicious
investment schemes which promise high returns in a short period of time.
— Bernama
Clement Jouling ialah
Perunding Unit Amanah berlesen (Licensed Unit Trust Consultant).
Sekiranya anda berminat untuk mengetahui lebih lanjut tentang instrumen
pelaburan dan pelaburan unit amanah, boleh hubungi beliau terutamanya buat anda yang berada di Kota Kinabalu dan sekitarnya.
