How your EPF savings would change if your retirement age is raised

Whispers are getting louder about Malaysia moving the retirement age from 60 to 65. The Human Resources Ministry has confirmed it is studying the shift, and recent statements suggest the topic will be on the table during broader labour reforms. Nothing is law yet, but it is serious enough that you should update your plan rather than wait for headlines to make the first move. This piece breaks down how the discussion affects your Employees Provident Fund (EPF), what has actually changed inside EPF since 2024, and the actions that put you on the right side of compounding. I will keep it practical, clear, and strictly “no em dash,” as requested.

The legal minimum retirement age remains 60 today. Employers cannot force earlier retirement without mutual consent. That part is unchanged. What is new is that officials are actively evaluating a move to 65, so the conversation is not just coffee shop talk. It is under study, not implemented.

Inside EPF, however, a major change already landed. Since 11 May 2024, members under 55 have three buckets instead of two. Contributions are now split into Akaun Persaraan for long term retirement, Akaun Sejahtera, and the new Akaun Fleksibel that can be tapped earlier. Existing balances were mapped from the old Accounts 1 and 2 into Persaraan and Sejahtera, while Fleksibel started from zero. New contributions are apportioned automatically. This matters because more flexibility today can tempt early withdrawals that weaken tomorrow’s compounding, so you want to use Fleksibel with discipline.

Withdrawal milestones are still driven by age, not the retirement age law. At 55 you can begin withdrawals from your Akaun 55, partial or full, and you can continue to leave money to compound if you wish. Contributions you make after 55 go to Akaun Emas, which you can then access at 60. At 60 your balances consolidate and you can take lump sums or set up monthly payouts. Crucially, EPF dividends continue to be paid on remaining balances all the way up to age 100. There is no forced liquidation at 60. This is one of the most misunderstood rules and it is worth repeating.

Malaysia is getting older. Life expectancy at birth for a baby born in 2024 is about 75.2 years. Men average about 73 years, women about 77.8, and that is a long time to fund after the last pay cheque. Combine that with the reality that savings are thin for many households, and you can see why policymakers are nervous about retirement poverty. As of late 2023, about 6.3 million EPF members under 55 had less than RM10,000 saved. That is roughly half of the cohort. In other words, millions are on track for monthly drawdowns that would not cover basic urban costs.

Officials also cite a sobering behavioural data point. About one in four members deplete their EPF savings within five years of reaching withdrawal age. That pattern is precisely why staying invested for longer and drawing down in a structured way matters if you want your money to last.

If the minimum retirement age moves to 65, your EPF access rules do not automatically shift unless Parliament amends the EPF Act. Historically, EPF has kept access tied to age 55 and 60 rather than employment status. If you retire before any change, you will still have access at 55 and 60 as today. If you work longer, you will get more compounding time and possibly more contributions, which is where the real impact sits.

After 60, the statutory employee rate is zero for Malaysians, and the employer minimum is four percent. That sounds low, but you can opt to contribute on top of that using Voluntary Excess Contributions so that a part of your salary still flows into EPF. This is a quiet but powerful lever because the money keeps earning EPF dividends.

Now layer in two pieces of policy support. First, the i-Saraan programme for self-employed and informal workers pays a 20 percent government match on your voluntary EPF contributions up to RM500 a year with a lifetime cap. Second, Private Retirement Scheme tax relief of up to RM3,000 a year has been extended through the Year of Assessment 2030. That combination makes it cheaper to turbocharge compounding for a few more years if you can afford to keep saving.

Think of your plan in two tracks. The first track is “what I do regardless of the law.” The second track is “what I adjust if 65 becomes real.”

On the first track, anchor your plan on real withdrawal ages. Build a simple drawdown schedule that starts at 55 and 60, then decide how much to leave inside for dividends. EPF pays returns that have historically hovered in the mid single digits, with the 2023 declared rates at 5.50 percent for Simpanan Konvensional and 5.40 percent for Simpanan Shariah. You are not getting equity-like returns, but you are getting stability and a proven compounding engine on a tax-sheltered base, which is exactly what retirement money is supposed to be.

On the second track, position yourself to benefit from an extra five years of compounding if the policy shifts. The maths does not need to be complicated to be convincing. Imagine you reach 60 with RM240,000 and you leave it invested for five more years at a 5.5 percent annual dividend. Without adding a single ringgit, that grows to roughly RM314,000 by 65, purely from compounding. If you also keep working and choose to contribute five percent of a RM6,000 salary while your employer contributes four percent, that is about RM6,480 a year in new savings. Add those for five years and you would end up near RM350,000, with the extra RM36,000 coming from new contributions and the growth on them. Small steady inputs plus time can move the needle more than people expect. The exact figures will vary with your salary and the dividend declared, but the direction is clear.

EPF is the core pillar, but it is not the entire house. PRS gives you long term exposure to professionally managed funds with the perk of RM3,000 annual tax relief through YA 2030. That is a real, cash flow improvement at tax time, and if the retirement age moves, you would have five additional years to claim it while building a second pot that is not governed by EPF’s age-55 and age-60 milestones. You still need to respect PRS withdrawal rules, but you are not tying your hands to EPF, which adds flexibility. Outside PRS, unit trusts and ASNB products can round out your allocation to meet specific goals and risk levels. Keep fees in focus and automate contributions so your future self does not depend on your mood at month end.

The new three-account structure can work in your favour if you treat Akaun Fleksibel like a pressure-valve for short term shocks, not a lifestyle top up. A ringgit drawn early from Fleksibel is a ringgit that never compounds inside Persaraan. Use it to avoid high interest debt or to absorb emergencies, then replenish it so your long term buckets stay intact. Akaun Sejahtera sits between today and tomorrow, helpful for life milestones such as education or housing under permitted withdrawals. Akaun Persaraan remains your non-negotiable core that should live through your 50s and beyond. Think like a portfolio manager who is paid to be boring, and you will thank yourself later.

EPF refreshed its benchmarks for retirement adequacy in late 2024 using Belanjawanku data. As a rule of thumb, Basic Savings now anchor at RM390,000 by the retirement age, Adequate Savings at RM650,000, and Enhanced Savings at RM1.3 million. These are not laws. They are targets to help you calibrate. Use them as a dashboard and adjust for your location, dependents, health, and whether your home will be fully paid off. If you are currently tracking toward Basic but aiming for Adequate, the final five working years are your chance to close the gap.

It is fair for youths to worry that a higher retirement age could make entry level jobs scarcer. Policymakers have acknowledged that any reform must balance older worker security with youth employment. Expect guardrails like reskilling, phased retirement, or sector specific exemptions to feature in the discussion if Malaysia proceeds. Your job is to avoid binary thinking. You can plan for a later retirement while still investing in younger family members through education funds and referrals into growth sectors. You can also keep your own skills current so that the extra five years are a choice you welcome rather than a penalty you endure.

Log in to i-Akaun and review your latest distribution between Persaraan, Sejahtera, and Fleksibel. Set a personal rule for Fleksibel withdrawals and stick to it. Map out a 20 year drawdown plan that starts at 55 and 60 instead of a single lump sum. If you are an employee over 60, speak with HR about using EPF Voluntary Excess so some of your salary keeps compounding inside EPF. If you are self-employed or a gig worker, switch on i-Saraan contributions to capture the 20 percent government match up to RM500 a year. Finally, add PRS to your monthly standing instructions so you lock in up to RM3,000 of tax relief through 2030. Small monthly moves beat big one-off resolutions every time.

Right now, the retirement age conversation is only that, a conversation. Your EPF access rules remain age-based, your dividends can keep working all the way to 100, and you have new flexibility inside EPF with the three account structure. At the same time, the case for planning as if you will work and save for five more years is strong. Malaysia is living longer, too many accounts are thin, and compounding is undefeated when you give it time. If the law moves to 65, you will be ready. If it does not, you will still have a bigger, longer lasting retirement. That is a win either way.