KUALA LUMPUR, Oct 22 — If you are given a pot of money, would you spend it all in one go or over just a few years, or would you make it last for the rest of your life?
Shifting away from lump-sum EPF withdrawals towards lifelong income
At the recent Employees Provident Fund (EPF) International Social Wellbeing Conference 2026 (ISWC 2026), global pension expert William Price said the idea of accessing retirement savings as a lump sum is deeply embedded in Malaysian society, partly because of expectations or plans to help one's children pay for their education, a house or a wedding, for example.
Price said, however, that viewing retirement savings as a “pot of assets” could almost blind people into thinking they have a lot of money, while focusing on it as “income” would provide a “reality check”.
While people tend to have more savings and a greater ability to work or remain active in the early years of retirement, he noted that OECD data showed older people (aged 76 and above) were poorer on average in virtually all OECD countries.
Price proposed three possible solutions for Malaysia:
1. Introduce a non-contributory pension, raise the retirement age and increase the EPF withdrawal age
(If there is an integrated reform of both private and public pensions)
Unlike a defined-contribution retirement savings scheme such as the EPF, where members contribute to their own retirement savings, a non-contributory pension provides retirement benefits without requiring recipients to have made contributions.
Price said non-contributory pensions had been fundamental to reducing old-age poverty in other countries, noting that some people were unpaid carers or unable to work.
“And you just have to accept there will be some people, in the way that some people never work; some people are disabled; some people are lifetime poor; some people were working non-stop, but just not paid because they were caring or whatever the circumstances were,” he said at ISWC 2026.
Price proposed that the government introduce a tax-funded “non-contributory pension” for all Malaysians aged 75 and above, providing a minimum income sufficient to cover basic living expenses, such as groceries.
“So if there was an integrated reform, what I would do is that there would be a non-contributory pension for everyone at 75,” he told Malay Mail, adding that it could be taxable for wealthy recipients or tax-free for those relying on it as their sole source of income.
Why 75? Price said introducing non-contributory pensions from that age would be more affordable, as the population aged 75 and above is relatively smaller than those aged 60 or 65 and above.
Currently, Malaysia's minimum retirement age is 60, while Malaysians can choose to withdraw their entire EPF savings or make monthly or partial withdrawals from as early as age 55.
Alongside the proposed government-funded pension kicking in at 75, he also suggested raising both the retirement age and the age at which members can access their EPF savings as a lump sum to 60 or 65.
This would help people preserve their savings for longer and ensure they have sufficient income until at least age 75.
“So you say to people, ‘your money has to last until 75 at least’. And so they’ve got a kind of a fixed window of time. They’re like ‘okay, so I need to save enough to mean that I’ve got enough until I’m aged 75, and then the government will give me ‘X’,” the CEO of pension consultancy firm D3P Global told Malay Mail.
Those who feel the proposed non-contributory pension would be insufficient to meet their needs after age 75 could plan to retain some of their EPF savings beyond that age, allowing them to rely on a combination of both income sources in later life.
2. Set aside some EPF savings to generate income from age 75 onwards
(If there is no integrated reform of the public and private pension systems)
In a scenario where the government does not introduce a non-contributory pension, Price proposed that Malaysians set aside part of their EPF savings to provide an income after turning 75.
In his ISWC presentation, Price illustrated how a retiree could make withdrawals from their pension savings over a 10-year period (say, from age 65 to 75), while a portion of their retirement balance is used each year to fund a “deferred annuity” that would provide income for the rest of their life after turning 75.
Noting that the actual method would depend on what people find acceptable, Price outlined several possible options:
- Set a minimum level of EPF savings that everyone must have by age 75, with part of their EPF savings transferred to a fund for those aged 75 and above (75+ fund) from age 60 or 65 onwards.
Savings not transferred to the 75+ fund could still be accessed before age 75.
Savings transferred to the fund could only be accessed after age 75, but would go to beneficiaries if the member dies before reaching that age.
- Begin transferring savings to the 75+ fund at an earlier age, such as 35, 40 or 45.
- Transfer only the annual EPF dividends, for example, from age 55 or 60 onwards, to the 75+ fund.
Price explained that there was nothing “magic” about the number 75 and that the proposal could also be used to ensure an income from other ages, such as 70.
“So, the number kind of depends on the population and the amount of savings they have. But because lots of people don't have a lot of EPF savings, you can't really afford to have a guaranteed minimum from age 60 until you die. It's just too expensive,” he said.
As for the EPF withdrawal age, he said it could be raised gradually, first from 55 to 60 and eventually to 65.
3. Introduce a variable annuity designed to provide income for life
Price said the EPF currently pools or shares investment risk among its members, but does not pool longevity risk.
In other words, members face the risk of living longer than their EPF savings can last.
He proposed that the EPF introduce a variable annuity, under which members would share both investment and longevity risks.
Under this proposal, members would have access to only a portion of their EPF savings, such as 10 per cent or 25 per cent, while the EPF would invest the remainder to generate lifelong income.
“The majority of your EPF money is invested. And from the age of 60 or 65, you are paid an income which will last until you die, and the amount of that income will depend on the balances that you have, the amount of savings you have,” he said, adding that the EPF could continue managing the investments as it currently does.
Explaining the pooling of mortality or longevity risk, Price said no one could predict how long they would live.
“So the people who die young get less; the people who die much later, they still get the income until they die. So you don't have to deal with the risk that you may live too long and outlive your savings,” he said.
He said income from the variable annuity could be taxable or tax-free, depending on the recipient's wealth.
Typically, with insured fixed annuities, insurance companies assume the longevity risk and guarantee a fixed annual payment until a person's death in exchange for a lump-sum payment.
Under Price's proposal, however, the annual income paid through a variable annuity would not be fixed but would depend on both investment performance and how long people in the pool live.
“If everyone is living longer than we expected, your annual payments will be a bit lower,” he said, adding that the lifelong payouts could be recalculated annually or based on an average.
Price said Malaysia could adopt any of the “three basic ideas” he had proposed as solutions.
“And it just depends which is the most politically acceptable and achievable.”
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