There's no better time TO START than NOW

source :
http://thestar.com.my/news/story.asp?file=/2008/1/26/nation/20134988&sec=nation


EPF to start ’em young on investments


KUALA LUMPUR: Beginning Feb 1, younger Employees Provident Fund (EPF) contributors will be able to make withdrawals from their accounts for investment.

This is under the EPF's new “Beyond Savings” scheme where members can withdraw a portion of their savings from their Account One that is in excess of a “basic savings,” which varies according to age.

This basic amount increases according to the age of the contributor and would ensure that he had at least RM120,000 by age 55, said EPF organisational development division head Hizwani Hassan.

Under the new scheme, contributors can withdraw at least RM1,000 and up to 20% of the excess amount once every three months.

For example, the basic savings amount for a contributor aged 25 is RM9,000 while a person aged 35 must have at least RM29,000 before he can make a withdrawal.

Currently, members can invest 20% of the excess of RM55,000 in Account 1. This scheme will be scrapped on Feb 1.

“The amount of savings put aside in Account 1 progressively at various pre-determined age levels is to enable members to accumulate the minimum savings that will enable them to reap RM500 a month for 20 years (after retirement),” said Hizwani.

For an employee to achieve the RM120,000 basic savings, it is estimated that an 18-year-old, at current contribution rates, will have to earn at least RM444 a month with a 3% yearly increment and at 4% annual EPF dividend, he said.

By Feb 1, 1.76 million contributors will be eligible to invest RM23bil from Account 1, compared to 850,000 people who are eligible to invest RM96bil currently.

Meanwhile, from Feb 1, about 150,000 employees aged between 55 and 75 will have to make mandatory EPF contributions.

EPF deputy CEO Ibrahim Taib said that the new ruling was introduced in view of Malaysians living longer and to encourage those above 55 to continue working.

Under the scheme, employees will contribute 5.5% and employers 6%, he said at the EPF headquarters here yesterday, adding that employees can also opt to contribute more.

Currently, contributions from those aged 55 and above are voluntary, and the amount is agreed upon between employers and employees.

Those who fail to contribute will be liable to three years' jail and can be fined up to RM10,000 or both under the EPF Act, Ibrahim said.

For non-citizens aged 55 to 75 who chose to contribute after Aug 1, 1998, the rate is 5.5%, while employers pay RM5 a month.

As of Dec 31 last year, there were 5.57 million EPF contributors and 144,467 were between 55 and 75 years old, said Ibrahim.





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