KUALA LUMPUR, August 1 — The federal government is proposing a major restructuring of the Employees Provident Fund (EPF) into a dual-component scheme comprising retirement savings and a pension fund, under the 13th Malaysia Plan (13MP), to improve income security in old age as Malaysia transitions into an aged nation.
The proposed reform would allow contributors to withdraw a portion of their savings upon retirement, while receiving monthly pension payouts from the remaining balance.
“A better mechanism will be explored to guarantee a continuous income after retirement. This mechanism will enable the separation of EPF contributions into two components: retirement savings and pension,” the 13MP states.
“Through this effort, workers will be able to withdraw part of their savings, while also receiving monthly pensions at retirement age.”
In addition, the government plans to develop a dedicated digital platform to facilitate regular cash transfers from adult children to elderly parents, in order to “guarantee post-retirement livelihood and strengthen the role of the family institution”.
The EPF reform comes amid mounting concern over the adequacy of Malaysians’ retirement savings, following multiple pandemic-era withdrawals and rising living costs.
As of September 2023, approximately 6.3 million EPF members under 55 had less than RM10,000 in their EPF accounts, translating to estimated monthly retirement incomes of less than RM42 over a 20-year period.
In addition, the Ministry of Finance reported that as of end-September 2024, a total of RM10.78 billion had been withdrawn from EPF’s Flexible Account (Account 3), introduced earlier that year to allow unrestricted withdrawals by members under 55.
At the demographic level, the 13MP notes that Malaysia became an ageing nation in 2021 — when the share of those aged 65 and above reached 7 per cent of the population — and is projected to become an “aged nation” by 2043.
Population growth is expected to decline from 1.9 per cent in 2024 to 1.1 per cent by 2030, primarily due to lower fertility and increased life expectancy.
According to the Department of Statistics Malaysia (DOSM), the number of live births in the first quarter (Q1) of 2025 dropped 11.5 per cent to 93,500, compared to 105,613 in Q1 2024 — the lowest quarterly figure recorded to date.
Malaysia’s total fertility rate (TFR) also fell to 1.7 children per woman in 2023, down from 2.1 in 2010. TFR is considered to be at “replacement level” when it reaches about 2.1 children per woman, the rate needed to sustain a stable population in the absence of migration. Malaysia has remained below that threshold since around 2013.
Despite these trends, the 13MP does not propose direct pro-natal policies. Instead, it emphasises ageing as an economic opportunity, aiming for a “productive, dignified and healthy” older population who can continue contributing to society.
To address these shifts, the 13MP sets a target to increase labour force participation among those aged 60 to 64 from 36 per cent in 2024 to 38 per cent in 2030, and to expand the number of trained care workers from 43,000 to 50,000 in the same period.
As part of broader labour market reforms, the government plans to review the Minimum Retirement Age Act 2012 [Act 753] and introduce new legislation on re-employment after retirement, particularly for civil servants. Flexible work arrangements will also be promoted to support continued employment among older workers.
A separate reform is also proposed under the Pensions Act 1980 [Act 227], aimed at adapting Malaysia’s public pension system to an ageing workforce.
Act 753 sets the mandatory retirement age in the private sector, while Act 227 governs the retirement framework for civil servants. The current retirement age for both sectors is 60.
In May, Minister in the Prime Minister’s Department (Law and Institutional Reform) Azalina Othman Said suggested the government study raising the retirement age to 65, noting that many employees remain active and capable well into their 60s.
Meanwhile, a law related to long-term care (LTC) will be developed to harmonise policies and regulations across government agencies. The 13MP states that this legislation aims to ensure LTC services are “high quality, accessible and affordable”.
A central regulator will be appointed to oversee the care ecosystem, including facilities for children, persons with disabilities (OKU), older adults, and religious boarding institutions.
Meanwhile, national standards for care professions and home- or community-based care training modules will be introduced. Social protection for both formal and informal care workers, including incentives for youth to take up technical and vocational education and training (TVET) in care services, will also be enhanced.
However, beyond efforts to regulate and professionalise the sector, there is little indication of new public spending or infrastructure for elderly social care. The five-year plan sets a modest target to commercialise just three new medical devices or assistive products for older adults by 2030, reinforcing the heavy reliance on private providers and informal care.
