A healthy retirement system rests on three legs. The first is a reliable public pension that protects against poverty in old age. The second is private savings that grow over decades and provide dignity and choice. The third is risk protection that prevents shocks from wiping out whatever people manage to save. Malaysia already has strong pieces of this puzzle. The Employees Provident Fund is a respected, professionally managed savings vehicle used by formal employees. The Social Security Organisation provides insurance against work injuries and related risks. Yet for millions of Malaysians who are self-employed or who earn primarily through platforms, the second leg is shaky. Many are not saving regularly for retirement. Their incomes are volatile. Their working relationships fall outside the standard employer-employee mold that our contribution system was built around. The policy question is straightforward but thorny. Should EPF contributions be mandatory for this group, or should Malaysia continue to rely on voluntary schemes with sweeteners and nudges?
Today, participation for the self-employed and gig workers is voluntary through EPF’s i-Saraan program. It is simple, flexible, and incentivised. Contributors can top up at any time and receive a government match of 20 percent of their yearly contributions, capped at RM500 a year, which is earned fully by contributing RM2,500 in a calendar year. Both the program and the matching structure have been deliberately enhanced in recent budgets to make it more attractive to informal and platform workers who lack employer co-contributions.
Parallel to EPF, Malaysia has taken a major step on the risk protection leg. Parliament passed a Gig Workers Bill in late August that moves social protection through the Socso channel to the forefront for platform workers. The framework covers gig workers under the Self-Employment Social Security Act, with contributions collected through platforms and a small per-transaction deduction to finance accident, disability, and survivor benefits. Policymakers have signalled that retirement adequacy via EPF is the next frontier once the Socso mechanism is established at scale.
These developments matter because the shape of work is changing fast. The self-employed and platform workforce has been rising and now forms a significant share of Malaysia’s labour market. Analysts estimate that this group accounts for a sizable and growing proportion of total workers, and because participation in EPF is not compulsory for them, retirement security gaps are widening. The concern is not theoretical. It shows up in survey data, in call-in radio programs, and in the lived experience of riders and freelancers who tell you they want to save but cannot be sure that this week’s income will be enough. Journalists and researchers have repeatedly flagged the risk that, absent structural changes, too many Malaysians will arrive at age 60 with modest balances and few options.
How should we evaluate the case for a mandate? Start with principles. Retirement systems work best when contributions are regular, early, and long-term. People are more likely to save if the default is set for them and if the system removes friction. The formal sector achieves this with payroll deduction and shared employer-employee contributions. The self-employed world does not. A mandate approximates payroll deduction by making contributions a normal cost of earning income. It also levels the playing field with employees. The equity argument is intuitive. Two Malaysians earning the same income should not face radically different retirement outcomes simply because one is salaried and the other is a driver, designer, or hawker.
On the fiscal side, there is a forward-looking argument. If large cohorts arrive at retirement with inadequate savings, pressure rises on public transfers later. Private savings through EPF lessen the long-run strain on social spending and stabilise domestic capital formation. This is not an abstract macroeconomic story. EPF is a major long-term investor in Malaysia. Broadening regular contributions strengthens the pool of patient capital that finances infrastructure, housing, and productive assets. The long time horizon of EPF also means compounding does a great deal of the heavy lifting, but only if contributions flow in throughout working years.
International practice supports these points, though no country has the exact same mix of institutions. Singapore mandates MediSave contributions for the self-employed to ensure healthcare financing and requires them to keep saving even if they also hold platform or part-time jobs. The rule is enforced through the tax system and paired with calculators and tools that account for income volatility. This is not the same as mandatory retirement savings, but it demonstrates that a self-employed mandate can be made workable when contributions are integrated with tax filing and when enforcement is routine rather than punitive.
Other countries illustrate the power of defaults. The United Kingdom’s automatic enrolment placed employees into workplace pensions with an opt-out rather than opt-in and dramatically increased participation. The UK now debates higher minimum rates because adequacy remains a concern, a reminder that participation is only the first step. The self-employed were largely outside that reform, which is why think tanks and government reviews are now exploring ways to bring them in through the tax system or through product design that mimics payroll deduction. These experiences suggest that automatic mechanisms work, and that integrating contributions with existing administrative systems is essential.
New Zealand offers a different lesson. Its KiwiSaver framework is voluntary for the self-employed, who are enticed by an annual government credit worth 25 percent of their own contribution up to a cap. Participation exists, but gaps remain because optionality combined with volatility often leads to irregular saving. Incentives help but do not fully overcome behavioural and income barriers. Malaysia’s i-Saraan is philosophically similar. The growing take-up and the expanded matching show that the carrot is working for many, but the voluntary structure still leaves a large uncovered fringe.
Those are the arguments for a shift from voluntary to mandatory EPF contributions. The case against is practical and deserves equal weight. The single biggest risk is that a rigid mandate could create hardship for workers with volatile earnings. A rider who has a lean month, a market trader facing a lull, or a freelancer waiting on invoices may have little cash to spare. If contributions are inflexible, people will either fall into arrears or find ways to avoid the system. Bad design could push work further into informality, the opposite of what policymakers want. A second risk concerns administration. Requires who will collect, how rates will be set, how exemptions will be processed, and what happens when income is earned across multiple platforms or in cash. Without simple, digital mechanisms, enforcement costs could outstrip benefits. A third risk is political. A mandate can be perceived as a pay cut if workers do not view EPF as their money for their future. That is a communications problem but a real one, especially in a period of high living costs.
Malaysia’s recent sequencing provides a practical path. The Gig Workers Bill establishes contribution rails through Socso first. Platforms will already be deducting and remitting a small levy per transaction, and the system will build the identity, record-keeping, and payments plumbing across millions of accounts. Once this network is proven, extending a retirement contribution on top of or alongside that flow becomes more feasible. Policymakers have, in fact, indicated that EPF will be considered in the next phase, which is prudent. It is easier to graft long-term savings onto a working collection system than to launch both at once.
What might a Malaysian mandate look like if the goal is both adequacy and fairness without unduly burdening cash-constrained workers? A hybrid approach is the most promising. The first element is automatic enrolment for all self-employed and platform workers with the right to opt out, renewed annually. Defaults are powerful. People tend to stick with them. The opt-out provides a safety valve for genuinely hard-pressed periods. The second element is a low initial contribution rate that phases up over time. Policymakers could start at a modest percentage of gross receipts or net income and increase gradually as the collection system matures. The third element is to route collection through platforms and the tax system. For platform income, per-ride or per-delivery deductions can be paired with quarterly true-ups that account for off-platform earnings. For small traders or freelancers, the personal income tax filing can compute EPF owed using a schedule that accommodates seasonal income. In both cases, EPF should offer smoothing so that a bad month does not trigger a compliance crisis.
Malaysia can also keep and refine the carrots that have shown results. The i-Saraan match should remain in place during the transition and be targeted more precisely. One option is a higher match for the lowest income brackets or for the first RM1,000 saved each year, which is where inertia is strongest. Another is to offer a temporary booster match for newly covered workers during their first three years to lock in the habit. Communication matters as much as money. Clear EPF statements that show projected balances and potential monthly payouts at retirement, expressed in simple ringgit terms, can convert an abstract deduction into a future benefit people can picture. The recent growth in i-Saraan participation demonstrates that visibility and incentives change behaviour, and that a well designed voluntary scheme already has momentum to build on.
Crucially, any mandate should be integrated with Socso so that workers experience a single, unified experience when they open an app or log into a portal. One dashboard, one contribution summary, and one help line will do more to build trust than a dozen separate notices. The systems should accept tiny contributions and batch them, rather than forcing workers to wait for a high minimum, because little and often beats good intentions that never make it into an EPF account.
There will be edge cases. Micro-entrepreneurs with temporary losses, caregivers with uneven months, and people juggling multiple income sources will need exceptions and intelligent defaults. The policy should formalise hardship provisions and make them as frictionless as possible. A worker who opts out due to hardship this quarter should be automatically re-enrolled the next quarter unless they actively confirm that they still need the waiver. That design aligns with how human attention works and reduces the long-run risk of permanent disengagement.
Critics will say that the voluntary match already in place is a cleaner solution, that it respects autonomy, and that the state should focus on raising incomes rather than rearranging contributions. There is truth here. Higher wages make saving easier. But experience from behavioural economics and the UK’s auto-enrolment shows that defaults matter at every income level. Leaving the self-employed fully outside a default regime cements an inequity with salaried peers. A well crafted mandate is not an intrusion. It is a commitment device that helps people do what they often say they want to do when asked in surveys. It also recognises the reality of platform work. When a driver’s income is sliced into thousands of tiny transactions, the only way to make saving stick is to slice a little off each one in real time.
Malaysia need not leap straight to a hard mandate with penalties. A phased sequence that starts with automatic enrolment and opt-out, paired with collection through platforms and the tax system, would capture most of the gains. Once the system is running smoothly, the government can evaluate outcomes and, if necessary, convert the soft default into a firm requirement at a basic rate while still allowing top-ups through i-Saraan with matching incentives. This is also the right moment to coordinate policy across borders. As Singapore’s approach shows, mandates for self-employed contributions can coexist with flexibility if they are built into existing administrative flows. As KiwiSaver’s experience shows, incentives alone do not reliably produce regular saving for the self-employed. The lesson is to use both.
So should Malaysia mandate EPF contributions for self-employed and gig workers? The answer is yes, but with care. Begin by using the newly established Socso rails to normalise small, frequent deductions that workers can see and trust. Layer a soft EPF default on top of those rails with a clear opt-out and a generous, targeted match for lower incomes to cushion the transition. Phase contribution rates up gradually and keep hardship provisions simple and well publicised. Integrate with the tax system for non-platform income so that people do not have to juggle multiple interfaces. Evaluate and iterate. Over time, once participation is high and the machinery works, convert the soft default into a modest but firm mandate so that the playing field between employees and the self-employed is fair.
Malaysia has just shown with the Gig Workers Bill that it can design modern social protection for a modern labour market and do so in a staged, pragmatic way. Retirement adequacy is the natural next step of that journey. A smart mandate will not just fill EPF accounts. It will strengthen families’ financial resilience, deepen the pool of long-term national savings, and send a message to every rider, freelancer, and micro-entrepreneur that the system sees them and is built for the way they actually work. That is both good economics and the right kind of nation building for the decades ahead.
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