13MP: New EPF Pension Scheme May Offer Monthly EPF Pension for Retirees

Malaysia’s Employees Provident Fund (EPF) pension scheme is under the spotlight as the government considers a major reform under the 13th Malaysia Plan (13MP).

The proposal would introduce a monthly EPF pension option alongside the current lump‑sum withdrawal. While still under review, this move could change how Malaysians manage their retirement and how employers prepare their workforce for long‑term financial security.

This article explains the proposal, why it matters, and how employers can prepare for possible changes.

What is the Proposed EPF Pension Scheme?

Under the 13MP, the government is studying a dual‑component EPF system:

Retirement savings – A portion of EPF contributions remains available for a lump‑sum withdrawal at retirement, just like today.
Monthly pension – The remaining portion would be paid monthly after retirement to provide a steady income.

This EPF pension scheme aims to combine flexibility and financial security. EPF has confirmed the proposal is still under study, and current rules remain unchanged.

Why the Government Is Considering a Monthly EPF Pension

Malaysia’s Ageing Population

Malaysia became an ageing nation in 2021, and faces the prospect of an older population by 2043.

Many EPF members, especially younger retirees, have limited savings. Reports show millions under age 55 hold less than RM10,000 in their accounts, which translates to minimal monthly pension if spread over a long retirement period.

Preventing Fast Depletion of Savings

Many retirees withdraw their EPF savings and spend them quickly. Within 3 to 5 years, funds may run out, leaving individuals without any financial planning.

A monthly EPF pension could prevent this “rich‑today, broke in five years” scenario by creating a predictable income stream.

Learning from Regional Models

Some analysts compare the proposal to Singapore’s CPF Life, where citizens receive a guaranteed monthly payout.

While Malaysia’s model would differ, the concept shares the goal of preserving retirement income and reducing financial risk.

Public and Political Responses

The proposal has triggered mixed reactions:

Supporters believe monthly pensions protect retirees from overspending and poverty.
MCA vice‑president Datuk Seri Dr Wee Jeck Seng insists it should remain voluntary, respecting members’ right to full withdrawal if they prefer.
Former BN strategist Eric See‑To warned that mandatory payouts may burden workers and reduce flexibility.

EPF assures that no decision is final, and members will be updated through official channels before any change.

What Employers Should Know About the Monthly EPF Pension

Employers should pay attention because this reform could affect HR, payroll, and employee planning.

Guiding staff on retirement planning strengthens trust and loyalty.
Preparing HR systems early will avoid last‑minute confusion if contributions are split for monthly pensions.
Being proactive in welfare and financial education can enhance employer reputation.

If the plan is approved, EPF contributions might be divided at source into:

A lump‑sum savings account for partial withdrawals.
A monthly pension account for post‑retirement income.

Employers should monitor announcements from EPF and the Economic Affairs Ministry, as well as any regulatory changes to the EPF Act or retirement age rules.

What Might Change Under the New System?

Under the proposed model:

EPF contributions would be divided into two parts at source: part for lump‑sum retirement savings, part reserved for monthly pension.
At retirement, contributors could withdraw a share from the savings component.
The remainder of the fund would automatically be converted into monthly payouts.
EPF will likely propose a digital platform or mechanism for managing and distributing the monthly pension

When will the New Scheme be Implemented?

The EPF and government confirm the monthly EPF pension scheme is still under study.

No timeline for implementation has been set. Existing withdrawal rules remain fully intact for now.

Need to Hire New Employees in Malaysia?

While the EPF pension scheme and monthly EPF pension are still under review, your business can stay ahead by attracting and keeping the best talent now.

Post your job ads on Maukerja, Ricebowl, and Epicareer with AJobThing to reach top local talent and keep your business moving forward today!