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Determinants of employees provident fund in Malaysia: Potential factors to jeopardize the EPF sustainability

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  • Sallahuddin Hassan
  • Zalila Othman

Abstract

The topic of EPF sustainability has gained considerable attentions among the governments worldwide. In the wake of growing elderly population, improving life expectancy and declining mortality rate particularly in Malaysia over the years, concerns arise on the EPF’s failure to fully commit the retirement incomes provision to the elderly population in the post-retirement periods. Specifically, this paper examines the short run and long run relationships between EPF balances and its determinants; investment earnings, nominal income, elderly population, life expectancy and mortality rate from 1960 to 2014. Of the findings, elderly population and mortality rate are unfolded to represent key deterrents of EPF balances, which acts as the proxy for the EPF sustainability, both in the short run and long run cycles. Thus, new improvements to the existing EPF scheme are recommended as means to alleviate the poverty problems among the elderly population besides addressing other economic and social fronts.

Suggested Citation

  • Sallahuddin Hassan & Zalila Othman, 2018. "Determinants of employees provident fund in Malaysia: Potential factors to jeopardize the EPF sustainability," Business and Economic Horizons (BEH), Prague Development Center, vol. 14(1), pages 29-42, January.
    • Handle: RePEc:pdc:jrnbeh:v:14:y:2018:i:1:p:29-42
    DOI: 10.15208/beh.2018.3
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    More about this item

    Keywords

    Employees provident fund (EPF); elderly population; mortality rate; sustainability;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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