LETTER | It does not take a rocket scientist to understand the concept of life after retirement, especially in today’s context. As has been reported numerous times in our daily press with various headlines regarding “rising inflationary costs and longer lifespans”, the average Malaysian begins to wonder if she/he can officially retire at the “comfortable” age of 60.
If we add Covid-19 to that equation, mandatory retirement at 60 is not exactly a comforting option. Perhaps this is why it is crucial for the government to consider raising the retirement age to 65, as per the clarion call that has been made by the World Bank recently.
Despite secondary data overwhelmingly speaking for itself for the worsening living standards faced by the average Malaysian worker, has the government seriously reflected on the emotional trauma the average wage earner is facing in the current dark days facing the Malaysian economy?
One perspective that showcases this sad plight is the recent move by the government, via the EPF, to introduce the i-Sinar withdrawal scheme. Here again, a genius is not needed to decipher the consequences of this scheme in the long run. Correct the depletion of hard-earned savings for post-retirement.
Along with i-Sinar, the EPF has also introduced the reduced mandatory employee EPF contribution from 11 percent to nine percent, effective from January till December this year. Most average workers like Kak Piah will opt for the reduced amount to meet with their monthly expenses.
But unlike most developed countries, Malaysians does not have a safety net to fall back on – the only vehicle of choice is the EPF. But ask yourself: with pay cuts in most companies, in some cases by 30-50 percent, how much will the extra two percent make-up be – perhaps about RM100 ringgit for someone earning RM5,000? Ask yourself what can RM100 achieve these days?
So, the real question is where will this lead to, with regard to the average Malaysian worker’s retirement nest? Unless the retirement age is raised to 65 – which will at least help assist many to make up for the loss of income and savings due to salary cuts after Covid-19.
Moreover, the Covid-19 pandemic has basically devastated our economy and disrupted our education, leading to worries about the long-term effects on the country’s youth in terms of graduation and gainful employment.
Increasing the retirement to 65 will also immediately reduce the number of new civil servant pensioners coming to the retirement grid, thereby providing the government huge savings to our already bloated spending due to the Covid-19 pandemic – as Thailand has already come to discover lately.
Malaysia is also an ageing population. Statistics have shown that by 2030, 15 percent of the population will be above 60. And we cannot entirely depend on our young workforce either – as many have already migrated or are planning to - unless of course, we decide to import foreign labour.
The telling signs by the World Bank should be heeded as its study found out that the employment prospects of younger workers are not impacted by the increase in the minimum retirement age. The irony is that the same study also found Malaysia’s annual economic growth will increase by 0.3 percentage points by increasing the retirement age to 65.
When Indonesia, with a younger population, and Singapore can be proactive, what is holding back this initiative here?
The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.