EPF vs the S&P 500: Should You Move Your Retirement Money? (Plus ASB)
In April 2003, Malaysian workers were furious. The EPF had just declared a 4.25% dividend for 2002, the lowest in 40 years. Unions talked about pickets outside EPF offices. Politicians called it a scandal.
Here is what almost nobody said at the time. If you had moved RM100,000 out of EPF and into the S&P 500 at the start of 2000, you would not have been angry about 4.25%. You would have been sick. Your RM100,000 would have shrunk to about RM62,000.
Fast-forward 26 years and the story flips. Counted in ringgit, that same RM100,000 in the S&P 500 grew to roughly RM803,000 by the end of 2025, while EPF turned it into about RM417,000.
So which one is right for your retirement money? The honest answer is: both, in the right order.
The short answer: Over 26 years (2000 to 2025), the S&P 500 roughly doubled EPF's result in ringgit terms, before fees and taxes. But it took about 20 years to pull ahead for good, it lost money over the first ten, and it guarantees nothing. EPF guarantees at least 2.5% a year on conventional savings and has paid 5.88% a year on average over the last decade. For most people over 40, the smart move is not to "move" EPF. Keep EPF as your safe core, and build an S&P 500 index fund beside it with new money you won't need for 10 years or more. ASB fits as a capital-stable extra for Bumiputera investors, not as a growth engine. |
Table of contents
What you are really comparing
Most "EPF vs S&P 500" arguments go wrong in the first five seconds. People compare EPF's dividend with the S&P 500's best years, as if they were the same kind of thing.
They are not. They are three very different tools.
EPF (Simpanan Konvensional) | S&P 500 index fund | ASB | |
What it is | Malaysia's national retirement fund | 500 of the largest US companies | PNB's fixed-price unit trust |
Recent return | 6.15% (2025) | +17.9% in US$ (2025) | 5.75 sen per unit (2025) |
Guaranteed minimum? | Yes, 2.5% a year by law | No | No, but price fixed at RM1 |
Can the balance fall? | No | Yes, by 30% to 50% in bad years | No |
Currency | Ringgit | US dollar | Ringgit |
Who can invest | All EPF members | Anyone | Bumiputera only, up to RM300,000 |
Taxes | Dividend tax-free | 15% to 30% US dividend tax, possible US estate tax | Tax-free |
Can you get the money out? | Mostly at 55 or 60 | Any day | Any time |
Read that table twice. The S&P 500 wins on growth. EPF and ASB win on safety and certainty. The question is never "which is best?" It is "which job does each one do in my life?"
26 years of real numbers, counted in ringgit
Here is the comparison most articles skip. A Malaysian does not spend US dollars at the pasar. So I converted the S&P 500's yearly total returns (dividends reinvested) into ringgit using year-end exchange rates, and set them against EPF's declared dividends year by year.
RM100,000 invested at the start of 2000 | S&P 500 (in ringgit) | EPF |
End of 2002 | about RM62,400 | about RM116,000 |
End of 2009 | about RM82,000 | about RM163,800 |
End of 2016 | about RM250,000 | about RM249,000 |
End of 2025 | about RM803,400 | about RM417,000 |
Yearly return, 2000 to 2025 | about 8.3% | about 5.65% |
Two numbers jump out.
First, the S&P 500 finished with almost twice as much money. That is the power of an extra 2.7% a year, compounded for 26 years. Small differences become enormous over long periods.
Second, look at the end of 2009. Ten full years after starting, the S&P 500 investor had less money than they began with, and half of what the EPF member had.
Why this matters if you are over 40: A 45-year-old who moved RM100,000 from EPF into the S&P 500 in January 2000 would have reached 55 in 2009 with about RM82,000 instead of about RM164,000. The long-run winner can be the short-run disaster. Your time horizon decides which one you get. |
These figures are before fund fees, US dividend tax and any currency conversion costs. I will show you those costs in a moment, because they matter.
The lost decade nobody shows you
Stock market fans love to show you charts that start in 2009, at the bottom of the global financial crisis. Of course the S&P 500 looks unbeatable from there.
A fairer test is to look at every 10-year window. I took each 10-year period from 2000-2009 through 2016-2025 and compared the yearly return of the S&P 500 (in ringgit) with EPF.
The S&P 500 won 13 of the 17 ten-year windows. When it won, it often won big, with returns of 14% to 20% a year against EPF's 6%.
But the four windows that started between 2000 and 2003 went to EPF. Over 2000 to 2009, the S&P 500 lost about 2% a year in ringgit while EPF earned about 5% a year. Even the 2004 to 2013 window was nearly a tie.
And the cumulative race took far longer than most people expect. On our RM100,000 example, the S&P 500 only caught EPF in 2016. It slipped behind again in 2018, and only pulled ahead for good in 2019. That is 20 years of waiting.
If that sounds impossible, read what happened to Japanese investors who waited 34 years for the Nikkei to come back. The good news is that the S&P 500 has never lost money over any 20-year period since 1926, which I walk through in this rolling-returns article. The bad news is that 10 years can still go badly.
The rule of thumb: Money you need within 10 years belongs somewhere boring, like EPF. Money you will not touch for 15 to 20 years can afford the S&P 500's bumpy ride. |
The ringgit twist that cut 2025's gain by more than half
Here is something that surprises even experienced Malaysian investors.
In 2025, the S&P 500 returned about 17.9% in US dollars. Brilliant, right? But the ringgit strengthened from about RM4.47 per US dollar at the end of 2024 to about RM4.06 at the end of 2025.
When you bring those dollars home, they buy fewer ringgit. Your 17.9% shrinks to about 6.9%.
That is barely more than EPF's 6.15%, and with far more risk. EPF itself felt this: its chief executive explained that a stronger ringgit reduced the ringgit value of EPF's US dollar investments in 2025.
The reverse also happens. When the ringgit weakened from 2013 to 2016, Malaysian S&P 500 investors got a bonus on top of the index's gains.
Over the full 26 years, currency moves roughly cancelled out. The ringgit started 2000 at RM3.80 and ended 2025 at about RM4.06. But over any 5 or 10 years, the currency can add or remove several percent a year. Earlier this year, several banks forecast the ringgit could strengthen toward RM3.80 to RM3.90 against the dollar. If that happens, it will trim the S&P 500's ringgit returns again.
You cannot control this. What you can do is accept it and invest for long enough that it stops mattering.
What about ASB?
ASB (Amanah Saham Bumiputera) is the third option many Malaysian families ask about. It is open only to Bumiputera investors, with a maximum of RM300,000 per person since 2023.
ASB's big selling point is its fixed price. Every unit stays at RM1. You never see your capital drop on a statement, the way you would with a stock market fund.
For 2025, PNB declared 5.75 sen per unit, the same as 2024, with a record RM10.4 billion payout to 11.4 million unit holders.
ASB used to beat EPF comfortably. From 2010 to 2014, it paid 8.5 to 8.9 sen a year, well above EPF. But its payouts fell sharply after 2015, hitting a low of 4.25 sen for 2020, the lowest in its history.
Since 2020, EPF has paid more than ASB every single year.
RM100,000 invested | EPF | ASB | S&P 500 (in ringgit) |
2010 to 2025 (16 years) | about RM254,600 | about RM286,500 | about RM979,700 |
2016 to 2025 (10 years) | about RM177,000 | about RM175,000 | about RM376,500 |
ASB figures use the declared distribution plus bonus per unit. Some years also paid an extra bonus on the first 30,000 units only, which is not included here.
Over the last 10 years, EPF and ASB delivered almost exactly the same result. The S&P 500 roughly doubled both, though this window started near a strong period for US stocks.
The ASB loan trap
Many people take an ASB loan (ASB financing) to "boost" returns. You borrow, say, RM200,000, invest it in ASB and hope the dividend beats the loan rate.
The numbers are thinner than the sales pitch suggests. One 2025 comparison listed ASB financing rates from about 4.5% to 5.35% a year. Against a 5.75 sen payout, the spread can be under 1%, and it can turn negative in a year like 2020, when ASB paid 4.25 sen.
You are also tied into monthly repayments for up to 35 or 40 years. For someone over 40 rebuilding after a loss, that is a lot of risk for a small reward.
Where ASB fits: If you are eligible, ASB is a good home for emergency money and short-term savings, because it is capital-stable and easy to withdraw. It is a sensible alternative to fixed deposits. It is not a replacement for long-term growth. |
The hidden costs that shrink your S&P 500 returns
Every S&P 500 figure above is the index itself. You do not get the index. You get the index minus costs. For a Malaysian, there are four.
Cost | What it is | Typical size |
Fund fees | Yearly management fee | 0.03% to 0.07% for big ETFs; often 1.5% to 1.8% for unit trusts |
US dividend tax | Taken before dividends reach you | 30% on US-listed ETFs; 15% inside Ireland-listed ETFs |
US estate tax | Tax on US assets if you die | 18% to 40% on US assets above US$60,000 |
Currency costs | Converting ringgit to US dollars | Small with a good broker, large at some banks |
The fund fee is the silent killer. A unit trust charging 1.8% a year takes almost all of the S&P 500's long-run advantage over EPF. If you go the unit trust route, read the fees your agent never showed you first.
The 30% US dividend tax is real because Malaysia has no tax treaty with the US. It costs roughly 0.3% to 0.4% a year at today's low dividend yield. Ireland-listed ETFs such as CSPX cut that roughly in half. I explain the legal way to cut that 30% tax here and compare the two main choices in CSPX vs VOO.
The estate tax is the one that can really hurt your family. If you hold more than US$60,000 in US-listed funds like VOO when you die, the US government can tax the excess at up to 40%. Ireland-listed funds avoid this. Please read the simple fix for the US estate tax trap before your holdings grow.
EPF and ASB, by contrast, are tax-free, fee-free to you, and have no estate tax problem.
Can you actually move your EPF money into the S&P 500?
Not directly. And for most people, only a small slice.
There are four ways money can move from EPF into the market.
Way No. 1: EPF i-Invest (Members Investment Scheme)
If you are below 55, EPF lets you invest part of your Akaun Persaraan (formerly Account 1) in EPF-approved unit trust funds through i-Invest.
The rule is simple:
Amount you can invest = (Akaun Persaraan balance minus Basic Savings for your age) × 30%
The minimum is RM1,000, and your eligible amount is recalculated every three months.
Basic Savings rose from 1 January 2026, as EPF phases in a new target of RM390,000 by age 60. Here are some 2026 figures:
Your age | Basic Savings in 2026 |
40 | RM74,000 |
45 | RM108,000 |
50 | RM150,000 |
54 | RM192,000 |
Worked example: Say you are 50 and have RM250,000 in your Akaun Persaraan. Your Basic Savings is RM150,000. The excess is RM100,000. You can invest up to 30% of that, which is RM30,000.
Notice the catch. You cannot buy a cheap S&P 500 ETF like CSPX through i-Invest. You can only choose from EPF's approved unit trust list. Some of these funds invest in global or US shares, but their yearly fees are typically up to about 1.8%. The sales charge through i-Invest is capped at 0.5%.
With those fees, a unit trust has to work very hard just to beat EPF, which charges you nothing directly.
Way No. 2: Akaun Fleksibel
Since May 2024, 10% of your new monthly contributions go into Akaun Fleksibel, which you can withdraw at any time. You could take that money out and invest it yourself.
Be careful. That account is meant for emergencies. If you drain it every year, you lose EPF's tax-free dividend on that money and leave yourself with no cushion.
Way No. 3: Withdrawals at 55 and 60
At 55, you can withdraw your savings, and EPF also offers an Age 55/60 withdrawal for investment. This is the point where the "move it or keep it" decision becomes very real.
At 55, your S&P 500 money still has a long life ahead of it. If you live to 85, that is 30 years of investing. But you also need a safe bucket you can live on during a crash, which is exactly what the 4% rule for retirees is designed around.
Way No. 4: Your new money, outside EPF
This is the cleanest route, and the one I like most. Leave EPF alone. Keep contributing. Then invest your extra savings, the money above your EPF contributions, into a low-cost S&P 500 index fund through a broker.
You get the S&P 500's growth without risking the money that EPF guarantees. You choose the cheapest fund. And you are building a second pillar, not knocking down the first. I show the brokers, fees and steps in how to invest in the S&P 500 from Malaysia.
The RM145 billion warning
Before you pull money out of EPF for any reason, remember what happened during the pandemic.
Through four special withdrawal programmes, i-Lestari, i-Sinar, i-Citra and a special RM10,000 withdrawal, about 8.1 million members took out a total of RM145 billion.
The result was painful. According to the Deputy Finance Minister, the median EPF balance halved, from RM16,600 in 2019 to RM8,100 in 2022. About 6.7 million members were left with less than RM10,000. EPF estimated that members would need to work an extra four to six years to rebuild what they withdrew.
EPF's own chief strategy officer said that by the fourth round, much of the money was going into investments such as gold, or into savings, rather than daily needs.
That is the trap. Money that leaves EPF "to invest" often gets spent, or gets put into the wrong thing at the wrong time. EPF's biggest hidden benefit is that it is hard to touch.
A sobering fact: By end-2025, only 41.2% of active formal-sector members aged 18 to 55 had reached their Basic Savings for their age. If you are behind, your first job is to rebuild EPF, not to raid it. |
Why the S&P 500 and not "a good fund"?
If you do invest beside EPF, how you invest matters as much as whether you invest.
In 2007, Warren Buffett bet US$1 million that a simple S&P 500 index fund would beat five fund-of-hedge-funds picked by professional manager Ted Seides of Protégé Partners over ten years. The bet ran from 2008 to the end of 2017.
The index fund returned 7.1% a year. The hedge fund picks averaged just 2.2% a year after fees. Buffett won so clearly that Protégé conceded early, and Girls Inc. of Omaha received about US$2.27 million. I tell the full story in Buffett's famous $1 million bet.
The lesson for Malaysians is direct. High fees and clever picks usually lose to the cheap, boring index. That is also true of most expensive unit trusts.
A simple decision guide
Here is how I would think about it, step by step.
And here is a rough "core and growth" split by age. These are starting points for thinking, not personal advice.
Your age | EPF and ASB (safe core) | S&P 500 index fund (growth) | Why |
40 to 49 | Keep 100% of EPF; ASB for emergency money | Most new savings above EPF | 15+ years to ride out a lost decade |
50 to 54 | Keep 100% of EPF; build cash buffer | A steady monthly amount, never money needed before 65 | Time is shorter; a crash at 53 hurts more |
55 and above | Keep enough in EPF or ASB for 5 to 10 years of spending | Only the part you won't touch for 10+ years | Protect the next decade, grow the one after |
If you lost money in the stock market before and you are nervous about starting again, investing monthly rather than all at once can make it much easier. I compare the two in lump sum or monthly after a big loss.
And if you worry you have left it too late, read you lost money at 50, is it too late to retire comfortably? The short version: no, but the order of your moves matters.
What to do tonight
Log in to KWSP i-Akaun. Check your Akaun Persaraan balance against the Basic Savings for your age.
Write down your number. If you are behind Basic Savings, your priority is topping up EPF, for example through voluntary contributions (i-Simpan), not withdrawing.
Decide your timeline. Mark any money you need within 10 years as "safe money": EPF, ASB if eligible, or fixed deposits.
Separate your growth money. Only money you will not touch for 15 years or more should go into the S&P 500.
Choose a low-cost fund. Compare yearly fees. A fee above 1% a year eats most of the S&P 500's advantage over EPF.
Think about tax and estate. If your US holdings could pass US$60,000, look at Ireland-listed funds.
Automate it. Set up a monthly transfer and stop checking prices every day. The investors who sell at the very bottom are usually the ones watching most closely.
Frequently asked questions
Is the S&P 500 better than EPF?
Over long periods, usually yes. From 2000 to 2025, the S&P 500 returned about 8.3% a year in ringgit against EPF's 5.65%, before fees and taxes. But it lost money over 2000 to 2009, while EPF never falls and guarantees at least 2.5% on conventional savings. "Better" depends on how long you can wait.
Can I use my EPF to buy an S&P 500 ETF?
No, not directly. EPF i-Invest only lets members under 55 invest in EPF-approved unit trust funds, up to 30% of their Akaun Persaraan savings above Basic Savings. To buy a low-cost S&P 500 ETF, you need a broker account and your own money, or money you have withdrawn from EPF.
Is EPF or ASB better?
Over the last 10 years they delivered almost the same result: RM100,000 grew to about RM177,000 in EPF and RM175,000 in ASB. Since 2020, EPF has paid more every year. ASB is easier to withdraw and only open to Bumiputera investors, so it suits emergency and short-term money better.
What is EPF's dividend for 2025?
EPF declared 6.15% for both Simpanan Konvensional and Simpanan Shariah for 2025, slightly below 2024's 6.30%. The total payout was RM79.6 billion. Over the past five and ten years, conventional savings have averaged about 5.88% a year.
Should I withdraw my Akaun Fleksibel to invest in stocks?
Usually not, unless you already have a separate emergency fund. Akaun Fleksibel earns EPF's tax-free dividend and is your safety net. If you do invest it, use only money you will not need for 15 years or more, and choose a low-cost index fund.
Is it safe to take an ASB loan?
It is legal and common, but the margin is thin. Financing rates of about 4.5% to 5.35% a year leave little room against a 5.75 sen payout, and the spread can turn negative in a weak year like 2020. You also commit to repayments for decades.
Does a stronger ringgit hurt S&P 500 investors?
Yes. In 2025 the S&P 500 returned about 17.9% in US dollars, but only about 6.9% in ringgit, because the ringgit strengthened. Over 26 years the currency effect roughly cancelled out, but over 5 to 10 years it can add or remove several percent a year.
Do I pay tax on S&P 500 investments in Malaysia?
Malaysians usually pay 30% US withholding tax on dividends from US-listed funds, or about 15% inside Ireland-listed funds. US-listed holdings above US$60,000 can also face US estate tax of up to 40%. EPF and ASB dividends are tax-free.
The bottom line
EPF is not a weak investment. It is one of the most reliable retirement tools any country offers its workers. Tax-free, fee-free, a guaranteed floor, and around 6% a year.
The S&P 500 is not a magic machine either. It can lose a third of your money in a year and take a decade to come back.
The winning move is to stop treating this as a fight. Let EPF be the strong, safe foundation of your retirement house. Build your S&P 500 growth floor on top of it, slowly, with new money, in a low-cost fund, and give it time.
Do that, and you get the best of both: the sleep-at-night safety of EPF, and the long-run growth that turned RM100,000 into about RM800,000 over 26 years.
If you chose Simpanan Shariah, see Is the S&P 500 halal? for Shariah-compliant ways to invest in large US companies.
If you have lost money in the stock market before and want to start again the right way, start with my free report.
Get my free 38-page report: "Why You Lost Money in the Stock Market (And Why It Wasn't Your Fault)." It shows the hidden traps that catch hard-working investors, and the simple index fund approach that fixes them.
About the author Stephen Loke has been a student of the market for more than 15 years. He is also an agritourism entrepreneur whose farm has been featured in Bloomberg News and Asahi Shimbun. This article is general education, not personal financial advice. I'm not a licensed financial adviser. Past returns do not guarantee future results. Please consider your own situation, or speak to a licensed adviser, before making investment decisions. |
Sources
EPF 2025 dividend of 6.15%, payout RM79.6 billion, asset allocation and ringgit effect: Malay Mail (28 Feb 2026), Bernama (28 Feb 2026), The Sun, New Straits Times
EPF five- and ten-year average dividends (5.88%): RinggitPlus, "EPF Declares 6.15% Dividend For 2025" (28 Feb 2026)
EPF historical dividends 2000 to 2023: Malaysiakini (2003, 2009), Japan Institute for Labour Policy and Training (2001, 2003), Bernama (1 Mar 2025)
Reaction to the 4.25% dividend for 2002: Malaysiakini (18 Apr 2003); Lim Kit Siang media statement (Apr 2003)
EPF 1H 2026 investment income of RM57.5 billion: The Star, Bernama, The Edge Malaysia (17 Aug 2026)
EPF Members Investment Scheme rules and 2026 Basic Savings table: Eastspring Investments, Kenanga Investors, AJobThing (2026), The Vibes (24 Mar 2026)
EPF Retirement Income Adequacy framework (RM390,000 Basic Savings): Berita Harian (Jan 2026), Utusan Malaysia (Dec 2024)
Share of members reaching Basic Savings (41.2%): Sinar Harian, RinggitPlus (2026)
i-Invest sales charge capped at 0.5%: New Straits Times (Apr 2024); typical fees up to 1.80%: iMoney
COVID-19 withdrawals of RM145 billion and median savings: Business Today (16 Feb 2023), The Edge Malaysia (8 Aug 2022), New Straits Times (Jan 2023), Malay Mail (18 May 2023), Selangor Journal
ASB 2025 distribution of 5.75 sen, RM10.4 billion payout: Bernama, The Edge Malaysia, New Straits Times (19-20 Dec 2025)
ASB distribution history 2010 to 2024: Berita Harian (Dec 2020), iMoney, New Straits Times (Dec 2024), The Edge (Dec 2020)
ASB RM300,000 limit: PNB press release (7 Oct 2022), Selangor Journal (Jun 2023)
ASB financing rates: StashAway Malaysia, "Ultimate Guide to Amanah Saham Bumiputera"
S&P 500 annual total returns: S&P Dow Jones Indices; NYU Stern, Aswath Damodaran, "Historical Returns on Stocks, Bonds and Bills"
USD/MYR exchange rates and the 3.80 peg: Bank Negara Malaysia history via The Edge Malaysia (2026), MarketScreener, Valuta FX, exchange-rates.org
Ringgit forecasts for 2026: The Edge Malaysia (2026)
US dividend withholding and estate tax for Malaysians: The Edge Malaysia (Jun 2026), iMoney, IRS Publication 515
Warren Buffett's $1 million bet: Institutional Investor, Fortune (30 Dec 2017), CNBC
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