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‘Overuse of flexible EPF account erodes savings’ o Every withdrawal reduces amount compounding for retirement: Fomca

Contributors urged to focus on real returns PETALING JAYA: Malaysians may welcome the Employees Provident Fund’s (EPF) projected 5.8% to 6.3% dividend for 2025, but experts said the figure alone does not guarantee a secure retirement as rising living costs and inflation could erode real purchasing power. Putra Business School associate professor Dr Ida Md Yasin urged contributors to focus on real returns, which measure the actual increase in purchasing power after inflation. “When we talk about real interest rate, we calculate it as nominal interest rate minus inflation. For example, if the dividend is 5.8% and inflation is 2%, the real return is 3.8%. That is the actual gain in what your money can buy.” Ida said Malaysia has seen relatively moderate inflation of between 2% and 4% in recent years but official Consumer Price Index (CPI) figures may not fully reflect household spending. “The CPI basket focuses on essentials. Individual spending patterns vary, so some households may feel costs rising faster than the headline figure suggests.” Addressing concerns that EPF members might tap savings for short-term expenses, she clarified that withdrawals are governed by strict rules. “There is no provision for festive withdrawals. Account One is primarily for retirement while Account Two allows withdrawals for designated purposes, such as buying a house or funding education.” She added that early or unnecessary withdrawals could erode long-term savings due to lost compounding. “The more you withdraw early, the less you benefit from future dividends. Over the long term, this could seriously affect retirement adequacy,” she said. EPF will announce its 2025 dividend on Saturday at a media briefing chaired by its CEO Ahmad Zulqarnain Onn. The announcement will be closely watched by more than 16 million members, reflecting EPF’s performance across local and overseas equities, fixed income, real estate and infrastructure. For the year ended Dec 31, 2024, EPF declared a 6.3% dividend for conventional and syariah accounts, with total payouts of RM73.24 billion – RM63.05 billion for conventional savings and RM10.19 billion for syariah savings. Historically, EPF dividends have outperformed commercial bank fixed deposits, offering contributors relatively attractive returns. “We can be proud that EPF has consistently delivered better returns than fixed deposits. This encourages higher national savings and provides some comfort for households relying on EPF as their main retirement fund,” said Ida, adding that sustained competitive dividends reinforce positive saving habits. However, she added that retirement adequacy remains a concern as EPF performance is tied to domestic and global economic conditions. “Malaysia is a trading nation, so international developments affect businesses and in turn, EPF investments,” she said, adding that the projected dividend indicates relatively solid investment performance over the past year. She also highlighted risks from geopolitical tensions, particularly in the Middle East, which could disrupt global supply chains. Under current rules, contributors can withdraw full EPF savings at age 55, although discussions are ongoing about raising the age to 60. Ida said some members exhaust their savings early but this is mostly due to individual financial behaviour, not flaws in the system. “The projected 2025 dividend is encouraging, but long-term retirement security depends on disciplined saving and prudent financial planning, not dividend rates alone.” – By Kirtinee Ramesh

He recommended distinguishing genuine needs from wants, considering alternatives, such as tighter budgeting, and replacing withdrawn funds when possible. Saravanan added that lower-income earners, workers with irregular incomes and young contributors are particularly vulnerable as smaller balances and underestimating compounding could significantly affect long-term outcomes. “With large-scale withdrawals already reported, financially fragile households could be reducing their retirement buffer early in their working lives.” He also called on policymakers to complement education with targeted savings incentives, stronger wage policies and enhanced social protection. “Flexibility could provide temporary relief, but structural solutions must come from policy intervention,” he said, advocating affordable microcredit, targeted subsidies and emergency assistance schemes to reduce reliance on retirement savings during hardship. “Retirement funds must remain a protected pillar of long-term security. Public policy should focus on reducing the circumstances that push people to draw down these savings early.”

Official figures tabled in Parliament show that as of June 30, 2025, about 4.63 million members had withdrawn RM14.79 billion from Account Three since its introduction. “This indicates that a significant number of Malaysians are using this facility as part of short-term financial management.” Survey findings suggest that most withdrawals are defensive, meaning they are meant for debt repayment and daily expenses rather than discretionary spending. “The dominant driver is financial strain, not indulgence.” Saravanan said financial literacy campaigns alone may not suffice. “Real-world cost-of-living pressures could override financial education. High utilisation of Account Three withdrawals shows that education must be paired with clearer tools,” he said, suggesting contributors be shown projections of how withdrawals today could shrink future retirement savings. He said to balance festive or short-term spending with long-term security, contributors should treat EPF funds, especially retirement portions, as protected assets. “The account should be viewed as a last-resort safety valve, not a spending supplement.”

Ű BY KIRTINEE RAMESH newsdesk@thesundaily.com

PETALING JAYA: The flexibility offered under the Employees Provident Fund (EPF) Account Three (Akaun Fleksibel) may ease short-term financial pressures, but repeated withdrawals could undermine Malaysians’ retirement security, said the Federation of Malaysian Consumers Associations (Fomca). Its CEO Saravanan Thambirajah said many contributors understand that Account Three is meant for urgent needs, but frequent withdrawals could erode retirement savings. “The word ‘flexibility’ can easily be interpreted as ‘it is safe to use.’ However, every withdrawal reduces the amount that can continue compounding for retirement,” he said, adding that EPF consistently reminds members to use the account prudently. Audit, probe ordered on finances of varsity PETALING JAYA: A governance crisis is unfolding in the higher education sector, with the Malaysian Corruption Watch (MCW) calling for a full forensic audit and independent probe after the 2026 Auditor-General’s Report uncovered major financial irregularities at Universiti Kebangsaan Malaysia. MCW president Jais Abdul Karim said the findings point to systemic failures in oversight and accountability within the higher education sector. The report revealed RM183.11 million in unreturned research grants involving 7,904 projects across four ministries, with the Higher Education Ministry accounting for the largest outstanding sum of RM110.67 million. Nearly half the funds have been overdue for between five and nine years, while some have remained unreturned for more than a decade. “At the same time, the audit uncovered serious financial mismanagement at the university. It had collected RM50.74 million in student fees through its cooperative without proper authorisation, RM32.36 million in unrecorded revenue and RM6.69 million in irregular expenditures, including commissions paid to unqualified agents. “The use of corporate credit cards by unauthorised individuals and conflicts of interest among university officials were also found.” He stressed that public universities are custodians of public funds and must be held to the highest standards. “They are institutions entrusted with public funds. Research grants and student fees are public money and contributions from families for children’s education. “When grants are left unmonitored for years and fees are not properly recorded, it is no longer merely an administrative issue, it is also a governance failure.” He urged authorities to conduct a forensic audit of all grants overdue for more than five years and all fee-collection agreements, calling for an independent probe into potential abuse of power, gross negligence or breaches of financial laws. “Any criminal elements must be referred to the Ű BY HARITH KAMAL newsdesk@thesundaily.com

MORNING MEAL ... Housing and Local Government Minister Nga Kor Ming spending time with firefighters at a sahur event at the Seputeh Fire and Rescue station in Kuala Lumpur yesterday. – BERNAMAPIC

2024 for the Master of Education and Postgraduate Diploma in Education programmes set total student fees at RM60.77 million, of which RM50.74 million was collected by Koperasi B-5-1788, a cooperative not formally authorised under the university’s Constitution to collect fees on the university’s behalf. Adam Adli said the university has taken over admissions and fee collection directly for the postgraduate programme seventh cohort first semester 2025/2026 and the master’s programme tenth cohort second semester 2025, describing it as a corrective measure to ensure transparency and accountability. “Adjustments have been made, recognising RM2.27 million for the master’s programme and RM30.09 million for the postgraduate programme in 2024, as well as RM27.67 million for previous 2025 cohorts, while all fees for the postgraduate programme seventh cohort have been fully accounted for. “A letter of demand has been issued to the cooperative involved, with RM1.83 million recovered, and efforts to recover the balance are ongoing through legal channels,” he said during the winding-up debate on the Auditor-General’s Report in the Dewan Rakyat.

Malaysian Anti-Corruption Commission.” Jais called on the Higher Education Ministry to implement a national recovery plan to strengthen grant monitoring and financial controls, saying accountability must extend to the highest levels of management. MCW pledged to monitor follow-up actions by the ministry and the universities involved, stressing that the public has the right to know how their money is spent and who is responsible. Responding on Tuesday, Universiti Kebangsaan Malaysia acknowledged receipt of the Auditor-General’s Report and said a comprehensive review is underway to facilitate reforms and strengthen governance systems. It said it is prepared to take disciplinary or legal action based on the final investigation outcomes, in line with due process. It added that internal corrective measures have been initiated and declined further comment to safeguard the integrity of ongoing investigations. Also on Tuesday, Higher Education Deputy Minister Adam Adli Abd Halim confirmed that the university has stopped using cooperatives for student admissions and fee collection. The audit found that offer letters issued in