Speaking at a panel discussion, EPF policy formulation advisory senior manager Wong Theen Chuan said the tendency to prioritise payoffs closer to the present time was a key behavioural tendency that people possess.

“Malaysians tend to prioritise what they enjoy now rather than plan for the future,” he said, adding that they also naturally tend to be highly optimistic about retirement.

“People hate change, and they want to remain in their comfort zone.”

Wong also felt that many people tend to have a scarcity mentality – referring to when people obsess over what they lack – and as a result, make poor decisions when under pressure.

“Humans are loss averse. People hate to lose, and the only way to neutralise that feeling is by winning double of what they lose,” he said.

He added that these were some of the behavioural insights considered when EPF created the new Akaun Fleksibel (Account 3), which is meant for short-term purposes.

Earlier this month, the EPF announced the introduction of Akaun Fleksibel as part of a restructuring in which Account 1 was renamed Akaun Persaraan and Account 2 became Akaun Sejahtera.

With the activation of Akaun Fleksibel, the proportion of savings that must be kept in the Akaun Persaraan rises to 75%, up from 70% previously.

The sum distributed to Akaun Sejahtera is reduced to 15%, leaving 10% for Akaun Fleksibel.

“By giving members 10% (for Akaun Fleksibel), we’ll actually move 5% to their Akaun Persaraan to accelerate their retirement savings,” Wong said, referring to the proportional increase in Akaun Persaraan savings from 70% to 75%.

He also said people should start their EPF savings early to maximise the benefits of compound interest and grow their retirement savings.