The function of the Employees Provident Fund (EPF) is still a cornerstone of pension schemes available in Malaysia. Currently, more than 16 million Malaysians depend on EPF as a means of saving for their lives after retirement. Throughout 2025 and going into 2026, EPF started making some modifications to its policies on the payment of dividends, withdrawals, contributions, and retirement targets to match the challenges we face in the real world. Below is a transparent guide to what to know heading to 2026.

EPF’s Strong Dividend Performance

EPF declared a dividend rate of 6.30% for both its Conventional and Shariah savings for the year ending 31 December 2024, one of the best performances in recent years. This saw total payouts increase to RM73.24 billion of which RM63.05 billion for conventional accounts and RM10.19 billion for Shariah accounts. According to recent news, experts are predicting that this 6.30% rate will likely be maintained for the year 2025. This strong dividend reflects EPF’s disciplined investment approach through heaving global markets and assures consistent growth for its members’ retirement savings.

New Policy Changes Effective January 2026

In January 2026, EPF introduced a number of policy and product updates focused on improving the integrity of retirement savings and the welfare of members. This is done by giving members greater flexibility to enhance their savings without compromising their current financial needs. All this information is in line with discussions surrounding the Malaysian Budget for the year 2026. The updates that has been introduced to the retirement savings are:

Increased Hajj Withdrawal Limit: The maximum amount withdrawable for the Hajj pilgrimage under Akaun Sejahtera was raised from RM3,000 to RM10,000 with simplified application procedures.

New Voluntary Contribution Schemes: EPF launched i-Saraan Plus for e-hailing and p-hailing drivers, offering government matching incentives up to RM600 annually (capped lifetime at RM6,000). The i-Suri scheme, for female contributors, was extended from age 55 to 60, continuing its matching benefits.

Renaming of Contribution Accounts: To simplify savings options, EPF refreshed account names, introducing i-Simpan for self-contributions and i-Topup for voluntary excess contributions. These changes encourage proactive saving with clearer categories.

The Retirement Income Adequacy (RIA) Framework

A significant milestone in 2026 will be the introduction of the Retirement Income Adequacy Framework, dubbed the RIA Framework, which does not concentrate on the lump sum targets as in the past but rather helps members understand the amount that they should save as per their living standards.

The RIA framework proposes three layers of savings for retirees. These are the Basic Savings of RM390,000 for supporting bare necessities, Adequate Savings of RM650,000 for suppoting comfortable lifestyles, and Enhanced Savings of RM1.3 million for enhanced financial security.

Such figures are based on extensive studies and research, including the Belanjawanku guide, 2024/2025. The research analyzes living costs in 12 major Malaysian cities. This concept seeks to enlighten and inform Malaysians on the need to plan a sustainable income rather than focusing on saving money.

Changes to Withdrawal Thresholds and Flexibility

Furthermore, in adherence to the Retirement Income Adequacy (RIA) initiative, the Employees Provident Fund (EPF) has now revised the existing process in relation to the withdrawal of due funds by members who are currently under the age of 55 years old. In essence, a member would be allowed to withdraw excess funds accumulated in his or her account, which is currently above RM1.1 million as of 2026. This threshold however, is expected to rise to RM1.2 million in 2027 and RM1.3 million in 2028. This adjustment is to take into account the rise of living costs and life expectancies in Malaysia.

The previous amount set was RM1 million. The phased approach strikes a balance between the need for financial flexibility while maintaining financial security in retirement.

In addition, eligibility under the Members’ Investment Scheme (MIS) has been synchronized to the Basic Savings level. This means that members who meet this standard are able to channel some of their savings to MIS and maintain adequate retirement savings.

The Gradual Rollout of Basic Savings Targets

To help members adjust gradually to the updated retirement benchmarks, EPF is phasing in the increase to the Basic Savings target over several years. The minimum amount is set at RM290,000 initially, rising to RM340,000 the following year, before reaching the full Basic Savings level of RM390,000 by 1 January of the final phase.

This transitional period gives the members the opportunity to adjust their contributions and retirement plans in accordance with changing living cost estimates and increases in longevity.

Expanding Voluntary Contribution Options

EPF continues to expand its voluntary contribution schemes, which allow members to enhance retirement savings:

i-Saraan: Voluntary savings with government matching incentives.

i-Saraan Plus: This scheme is intended for e-hailing and p-hailing drivers and caters to an incentive amount of up to RM600 annually from the government.

i-Suri: Expanding the age limit of women contributors to age 60, while keeping the matching incentive rates for contributions of up to 50%.

i-Simpan and i-Topup: New names to promote the idea of Self-Contribution and Voluntary Excess contributions.

These plans are important for members looking to outperform the minimum thresholds, or want to do so faster.

Account 3 (Akaun Fleksibel) for short-term financial needs

Also, EPF introduced a new account type known as 3 (Akaun Fleksibel). The introduction of the new account type happened in May 2024. The move will enable employees who are aged below 55 to withdraw their EPF savings to meet short-term expenses without depleting their long-term savings since EPF 3 makes up 10% of contributions made on a monthly basis.

Based on mid-2025 data, over 4.6 million contributors have withdrawn approximately RM 14.79 billion from Account 3, showing a high rate of usage in providing immediate relief to its members financially. However, members are encouraged to weigh between their immediate needs and long-term requirements in making their withdrawal decisions.

Conditions For Early Withdrawals Before Retirement Age

Generally,  withdrawing is allowed at the age of 60. However, there are specific situations in which individuals may withdraw their contributions for specific reasons. They include significant situations such as the family acquiring a first home for an individual, educational expenses, health-related expenses, and expenses related to Hajj pilgrimage.

This limit has now been raised to a maximum figure of RM10,000. Apart from the above conditions, other conditions are also allowed as far as the respect of the policies of the EPF is involved. The less money that is available now means less total savings for retirement later.

Trends in Voluntary Contributions

Voluntary contributions to EPF have gained significant momentum over the past years. According to official data for the year 2024, voluntary contributions registered an increase of 32% in voluntary contributors.

The rise was also evidenced in the i-Saraan programme, which recorded a 38% increase in the number of participants as well as the amount of contribution. This is a good development, emphasizing financial literacy and planning towards the future.

What the Changes Mean for Retirement Adequacy

With the introduction of the RIA Framework and new savings goals, members can now enjoy greater clarity in planning for their retirement life. The new three-tier system-Basic, Adequate, and Enhanced savings-assists in thinking beyond the lump-sum benefit to long-term income needs, which is critical as people live longer and face ever-mounting living expenses.

It must be comprehended that all continuous actions by EPF balance the equation among flexibility, incentives, and financial security to provide Malaysians with a sustainable retirement ecosystem.

How to Adjust Your EPF Strategy in 2026

In order to align your individual retirement strategy with the newly introduced EPF frameworks, it is advisable to set realistic long-term savings goals in accordance with the RIA Framework. It is also recommended that you explore opportunities such as the i-Saraan Plus scheme and the i-Simpan scheme as additional channels to help you build up your retirement savings pot. When making withdrawals from your Account 3, it is advisable to take up a thoughtful approach to ensure the security of your savings in general.

Furthermore, being aware of the dynamic change in excess withdrawal thresholds is beneficial.  These 2026 updates are designed to help you better understand and tackle the process of saving up for life after retirement.

In Summary

EPF in 2026 is to assist Malaysians in saving better, not just more. Saving better has been achieved through an improved dividend expectation, better withdrawal options, save more incentives, and the introduction of a new framework for retirement income adequacy. Being aware and taking initiative remains the key to planning for a secure retirement under an ever-changing EPF environment.