Concerns have been raised over remarks in Parliament by the Finance Minister II suggesting that Employees Provident Fund (EPF) savings could be used to pay premiums for the proposed base medical health insurance and takaful (MHIT) plan.
Critics argue that such a move could undermine retirement adequacy and worsen existing inequalities.
Mr Azrul Mohd Khalib, Chief Executive of the think tank Galen Centre for Health and Social Policy, said the EPF’s primary purpose is to protect Malaysians from financial hardship in old age and should not be used to finance healthcare premiums.
He warned that allowing deductions from retirement savings could give contributors a misleading sense of security while exacerbating long-term retirement shortfalls.
He added that using EPF funds to pay for MHIT premiums addresses short-term healthcare financing needs at the expense of long-term retirement protection, potentially leaving members financially vulnerable later in life when savings are most critical.
The EPF benchmarks basic and adequate retirement savings at MYR390,000 ($99,000) and MYR650,000, respectively, levels that are expected to rise with increasing living costs.
However, in 2023, Prime Minister Anwar Ibrahim highlighted that 51% of EPF members under 55—around 6.7m contributors—had less than MYR10,000 in savings. By August 2024, this proportion had fallen to 33%, underscoring the fragile state of retirement security in Malaysia.