Why are T20 savings increasing while B40 and M40 EPF funds decline?

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T20 Savings Increase Amidst B40 and M40 Declines in EPF Funds

The Employees' Provident Fund (EPF) savings for Malaysia's top income earners (T20) saw an increase during the Covid-19 pandemic, contrasting sharply with the declines experienced by the bottom 40 per cent (B40) and middle 40 per cent (M40) income groups. This disparity highlights a significant concentration of wealth within the EPF, with T20 members' savings growing from RM538 billion in April 2020 to RM597 billion by December 2022, an 11 per cent rise. Conversely, B40 savings plummeted by 46 per cent from RM13 billion to RM7 billion in the same period, while M40 savings fell by 28 per cent from RM191 billion to RM138 billion.
T20 Dominance in EPF Holdings

The T20 group, comprising 2.6 million EPF members, accounts for the majority of the total EPF funds. Their savings demonstrate a consistent upward trend, even during the economic uncertainties brought on by the pandemic. This indicates a greater capacity for continued contributions and potentially better investment returns compared to lower-income groups who may have faced more significant financial pressures.
Impact of Economic Pressures on B40 and M40 Savings

The substantial decrease in EPF funds for the B40 and M40 groups, numbering 5.2 million members each, suggests these demographics were more severely affected by economic challenges. Factors such as reduced income, increased living costs, and potential reliance on past EPF withdrawals to manage financial needs during the pandemic likely contributed to this decline. The data shows a stark reduction, with B40 funds halving and M40 funds experiencing a significant drop.
Government Stance on Withdrawals and Wage Structure Concerns

The government has opted against further EPF withdrawals, citing that those eligible may not necessarily need to withdraw and noting that other nations with similar schemes have ceased such facilities. Deputy Finance Minister Datuk Seri Ahmad Maslan highlighted a "very low" wage structure in Malaysia as a fundamental issue. The government's objective is to improve wages across all income levels and races to ensure sustained growth and high EPF savings for all citizens.
Disparities in Median Savings by Race

Further illustrating the savings gap, median EPF savings by race also show a downward trend for Malays and non-Malay Bumiputera, while ethnic Chinese and Indian savings also saw a slight decrease or remained high respectively. For instance, median savings for Malays decreased from RM16,938 to RM5,529, and for non-Malay Bumiputera from RM10,591 to RM3,302. This breakdown underscores the varied financial resilience and saving capacities across different demographic groups within Malaysia.

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Why are T20 savings increasing while B40 and M40 EPF funds decline?

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