KUALA LUMPUR, April 16 ― Putrajaya should roll out a two-tier system where Malaysians can withdraw parts of their retirement funds when they hit 55 and 60, PKR MP Rafizi Ramli said today.

Rafizi said the retirement fund for the private sector ― Employees Provident Fund (EPF) ― could allow Malaysians to decide on staggered withdrawals instead of using the current full withdrawal system for those who turn 55.

“For example, the contributor can choose to withdraw savings at the ratio of 60:40 (that is 60 per cent at at the age of 55 and the remaining 40 per cent at the age of 60), or 50:50 or 60:40. This choice of withdrawal ratio can be left to the individual contributors,” the Pandan MP said in a statement today.

Last Friday, EPF chief executive officer Datuk Shahril Ridza Ridzuan said the fund is considering the realigning of members’ withdrawal age for retirement savings closer to their new retirement age at 60.

The Minimum Retirement Act kicked in on July 2013, increasing the retirement age for those in the private sector from 55 to 60 to match the civil service’s retirement age, but also allowing employees to opt for earlier retirement if the contract provides for it.

Rafizi said today that EPF’s proposed change was due to worries that private sector retirees would have financial difficulties due to high living costs and also concerns that they could use up all their limited EPF savings within five years after a full withdrawal at the age of 55.

But he urged Putrajaya not to set 60 as the new age for full withdrawal of EPF savings, saying this would amount to punishing EPF contributors aged 55.

Instead, he blamed the federal government for low savings by EPF contributors and high living costs, claiming that the Barisan Nasional (BN) administration had, among other things, encouraged pro-business policies of low wages to spur investment and refused a minimum wage policy for decades.

“Because of this pro-employers policy which encourages the policy of low wages, the EPF contributions of private sector employees remain low until their retirement,” the PKR secretary-general claimed.

The EPF savings are deducted monthly from the contributors’ wages, with their employers also contributing a certain percentage based on the wages given.

Rafizi also blamed the BN government’s economic policies ― including the scrapping of fuel subsidies, the increase in electricity tariff and the introduction of the Goods and Services Tax ― for placing retirees in financial hardship due to increased living costs.

He said EPF should hold investment courses to educate EPF contributors on prudent investment after withdrawing their savings.