CHAPTER 8 :RETIREMENT PLANNING

Guide for estimating retirement needs

PROVIDENT AND PENSION FUNDS

  • Estimate income during retirement
  • Estimate inflation factor.
  • Estimate household expenditures during retirement.
  • Estimate finding for certain shortfalls.

Institutions that provide members and their dependence with social security in the form of retirement medical staff or disability benefits. Sources of funds come from contributions from members and their employers.

Contribution is determined by using a predetermined percentage of the employees' wage.

Defined as funds contributed by members where upon retirement the total contribution paid by the members and their employers including the accumulated interest will be given to members.

Employees provident fund

KWSP is a national Social Security organisation operating through our provident fund. Provides retirement benefits for members by managing the members savings. Mandatory contribution and it is credited to the members individual accounts and the amount is calculated based on the monthly wages of an employee.

Out of 23% contribution 11% will come from an employee and 12% from an employer. This contribution in return is invested by epf in approved financial instruments for example the Malaysian government Securities.

Account 1

70% of The Monthly contributions will be credited into this account. Savings in this account is meant to be used for your retirement and it cannot be fully withdrawn before reaching the age of 55 become incapacitated left the country or die then the payment will be made out to your nominee / heir.

Account 2

30% of The Monthly contributions are credited into this account. It is to help members to make early preparations for a comfortable retirement. Withdrawals are allowed for the purposes of :-

  • attaining the age of 50 years
  • owning a house which is the down payment for your first house
  • settling the balance of members housing loan which is the first house
  • financing education for members and that of members' children
  • medical expenses for members and that of members' children

Social Security organisation

Set up to provide Social security protections by social insurance including medical and cash benefits provision of artificial aids and rehabilitation to employees in order to reduce sufferings and to provide financial guarantees and protection to the family.