KUCHING: Aligning the Employees Provident Fund (EPF) withdrawal age with the national retirement age could help Malaysians build stronger savings for old age but the move will only succeed if the economy and labour market can sustain longer working lives.
Universiti Malaysia Sarawak (UNIMAS) senior lecturer Dr Dzul Hadzwan Husaini said the proposal must be seen in the context of Malaysia’s broader economic and institutional readiness, rather than as an isolated policy change.
“It is not merely a question of whether such alignment is good or bad, but whether the country’s economic and institutional frameworks are prepared for it,” he told Sarawak Tribune.
He said any decision to extend the retirement age should be accompanied by reforms that deepen economic complexity and create a labour market capable of absorbing both older and younger workers.
Without such balance, Dzul said, longer careers could reduce job openings for younger Malaysians and heighten inter-generational tension.
Beyond labour dynamics, he said policymakers should look past life expectancy figures.
“A longer lifespan does not necessarily mean a longer period of healthy and productive life,” he said, noting that chronic illnesses such as diabetes, hypertension and mental health issues reduce productivity and add social costs.
“Better public health, workplace wellness and lifelong learning programmes must accompany any change to the retirement age,” he added.
Dzul also highlighted the importance of fiscal discipline and effective tax policy.
“Fiscal leakages, regressive tax incentives and low-productivity spending would blunt the positive impact of longer working lives,” he said.
He explained that alignment would only strengthen retirement adequacy if improvements in health, labour and fiscal governance move in tandem.
On the economic front, Dzul said delaying EPF access would have minimal impact on household spending, as most members depend on their savings only after retirement.
“The effect would be more visible in the capital market, where EPF’s fund supply would remain larger for a longer period, supporting investment capacity and national savings sustainability,” he said.
He expressed support for aligning the withdrawal age with the official retirement age instead of maintaining early withdrawals at 55, noting that EPF already offers flexible access through three accounts — Account 3 for emergencies, Account 2 for education, healthcare and housing, and Account 1 for retirement.
“With these options, there is little justification for maintaining an early withdrawal age. A longer contribution and investment horizon would enhance compounding, improve retirement adequacy and strengthen Malaysia’s long-term financial resilience,” he said.
