The new EPF i-Legasi scheme allows parents to transfer retirement savings to their children’s accounts, but economists warn it requires careful financial planning.
PETALING JAYA: The Employees Provident Fund’s (EPF) upcoming i-Legasi facility, which allows members aged 55 and above who have met the basic savings threshold to transfer part of their excess retirement savings to their children’s EPF accounts, could strengthen intergenerational financial planning.
Economists said its success depends on consistent income growth, disciplined contributions and careful personal assessment.
Putra Business School Masters and Doctorate Course director Prof Dr Ahmed Razman Abdul Latiff said the mechanism offers flexibility but urged members not to compromise their own retirement needs.
“Risk remains for long-term retirement adequacy. Members should assess their actual needs for retirement and evaluate their own financial sufficiency, and not rely solely on the basic savings level,” he told theSun.
On eligibility for surplus transfers, Ahmad Razman said income alone does not determine readiness as financial circumstances vary widely among EPF members.
“What is more important is to focus on obtaining more competitive wages, maintaining higher contribution rates by employees and employers, consistently making voluntary contributions and avoiding withdrawals from the Flexible Account unless there is an urgent need.”
Socio-Economic Research Centre executive director Lee Heng Guie said the facility essentially formalises intergenerational transfers within the EPF system but requires careful individual consideration.
“Currently, any contributor can add up to RM100,000, but that must come from outside your EPF account.
“The objective of this facility is intergenerational saving – from parents to children. Once parents have fulfilled the basic savings requirement, they can transfer the excess within EPF instead of using external funds.”
Lee highlighted EPF data released on Feb 28 which shows there are 41% of members aged 55 who have funds above the basic savings level.
“Even if you have an amount above the basic savings level by the time you fully retire, because of inflation and the rising cost of living, it may still not be enough.
“Nowadays, children also have their own families. Things are not like 30 or 40 years ago.
“The cost of living has increased, medical costs have increased, everything has gone up. Ultimately, it all boils down to your financial planning. The scheme is optional and entirely up to the individual.”
Universiti Teknologi Mara economist Dr Mohamad Idham Razak said the sustainability of the scheme hinges more on behavioural choices than structural design.
“Based on current wage levels and contribution trends, it remains achievable but unlikely for the average EPF member. Those with consistent formal employment and uninterrupted contributions generally stand a chance but many workers face income volatility and career breaks.”
The Sun Malaysia
