KINIBIZ With days left before the new year, the Employees Provident Fund (EPF) is reminding its members of its new minimum savings benchmark that requires members to have RM196,800 in their EPF accounts by age 55, which will take effect in January 2014.

Earlier this year, the retirement savings fund revised its basic savings levels to be in line with rising costs of living, increasing life expectancies for Malaysians as well as inflation.

This is to enable EPF’s “13 million members to have an adequate and healthier level of savings to achieve a sustainable retirement,” EPF general manager for public relations Nik Affendi Jaafar said.

The revision, benchmarked against the minimum pension for public sector employees and is equivalent to RM820 a month for 20 years from age 55 to 75, is a 64 percent jump from the previous basic saving level of RM120,000 at age 55, which Nik Affendi says may not be enough to support members’ retirement as it is below the poverty line.

In a statement, EPF said its statistics showed that 71 percent of the fund’s members retire with less than RM50,000 in their EPF account.

In addition to the revised minimum savings, EPF has also taken other measures in its effort to drive up members’ retirement savings, among which are introducing 13 percent employer’s contribution rates for those earning below RM5,000 a month, full EPF contribution rates for employees aged up to 60 and offering financial advisory services to members beginning next year, via a pilot project in the Klang Valley, before a national roll-out in three years’ time.

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One effect of the revised minimum savings is that members will need to have more money saved in their EPF accounts before they can participate in unit trusts through the EPF Members Investment Scheme.

“This is to ensure that members have sufficient savings in their EPF account when they retire to finance their basic retirement needs before they can opt for other investment options,” Nik Affendi said.

In its statement, EPF also advised its members to identify their personal risk factors and investment objective before participating in the scheme, in addition to evaluating whether they are comfortable with the fund manager’s investment style.

The retirement savings fund also suggests that members seek professional advice before participating in the scheme as its risks and structure are different from that of the EPF.

Earlier this year KiniBiz ran a four-part series that put EPF in the spotlight, in which EPF chief executive officer Shahril Ridza Redzuan discussed the issue of insufficient savings for retirees.