A comprehensive pension framework that includes multiple programmes providing layered income and wide coverage is required to safeguard the retirement of future ageing populations, the Employees Provident Fund (EPF) said recently.
The demographic shift of rising life expectancy, currently at 75 years, poses a challenge for Malaysia, where a healthy life expectancy remains relatively unchanged at 65.7 years, EPF chairman Tan Sri Ahmad Badri Mohd Zahir said at the International Social Wellbeing Conference (ISWC) 2024.
“This gap highlights the need for more comprehensive care and resources for our ageing population, and to promote healthy ageing,” Ahmad Badri said.
By definition, Malaysia is already an ageing society — mostly internationally defined as having more than 7% of its population aged 65 and above.
By 2044, 14% of the population is expected to be above 65 years, making Malaysia an ‘aged society’, according to the World Bank.
However, a large swath of the 30 million-plus population has inadequate savings for retirement, with more than six million people under the age of 55 having less than RM10,000 in their retirement accounts, according to the EPF’s data as of September 2023.
Ahmad Badri said that securing retirement income, especially for informal workers, remains a challenge for the country, as these workers face a higher risk of poverty in old age, due to a lack of mandatory contributions to a formal pension or retirement programme.
Own-account workers — individuals who operate their farm or business, or trade on a full-time basis without employing any paid workers — comprise 18.3% of the workforce, according to March data from the Department of Statistics Malaysia.
Prime Minister Datuk Seri Anwar Ibrahim, who officiated the ISWC, emphasised the government’s commitment to pension reform towards ensuring every generation in Malaysia will be able to look forward to growing old with dignity.
“New solutions are needed to make sure no one is left behind, and that every layer of society benefits from social protection,” Anwar said.
Expanding EPF coverage to include more of the working-age population would allow Malaysians to accumulate adequate retirement savings, he noted.
“It is time for Malaysia to embrace serious reform in its pension and retirement framework to enhance its coverage, adequacy, and sustainability, and ensure financial security and equity for all Malaysians in their later years, and contribute to positive long-term economic growth,” Anwar added. – The Edge Malaysia
