No to raising retirement age, but govt may consider it for certain sectors

With our longer life expectancy and higher cost of living, some are proposing that Malaysia raise our current retirement age of 60. – 123rf.com

ONE in 10 people in Malaysia now is aged 60 and above.

In the next seven years, or by 2030, Malaysia is expected to become an ageing nation – meaning, 15% of our population will be made up of this age group.

Try to couple this with our longer life expectancy – from 74 years in 2010, it increased to 76 in 2020, according to World Bank data.

It leads one to question – is it time for us to work longer and retire later in life?

After all, working for a longer period could mean more money for our golden years and ease the sharp cost of living these days.

Today, it’s more expensive for senior citizens to get by – a senior couple living in the Klang Valley needs around 4% more in their estimated monthly expenses.

From needing RM3,090 a month in 2019, the estimated expenses for such a couple went up to RM3,210 last year.

This is based on a comparison of a study called The Belanjawanku Expenditure Guide done by Universiti Malaya researchers in 2019 and 2022.

Senior citizens in Klang Valley, whether single or with a partner, also topped the list with the most monthly expenses compared to those in other areas in Malaysia.

With all the factors at hand, some have proposed the option to work up to 65.

But for now, the government does not intend to raise the current minimum retirement age of 60, the Human Resources Ministry tells Sunday Star.

“However, the government may consider reviewing the minimum retirement age for selected critical sectors that require high level skills and expertise in order to retain talents,” it says in an interview in conjunction with Labour Day on May 1.

Such sectors to be considered have yet to be determined.

“But in future, the government may conduct a study to identify which sectors are suitable to increase the minimum retirement age,” it adds.

Currently, a worker who turns 60 can retire under the Minimum Retirement Age Act 2012, but this is not a fixed retirement age.

“This means that the employee can still continue to work even after they turn 60, depending on offers from their employer,” the ministry explains.

It says various factors need to be analysed and considered first before the government plans to increase the retirement age.

Now, the government is focusing on supporting the recovery of the labour market after the pandemic.

This includes helping to provide job opportunities for all groups, particularly youths.

“At the moment, the youth unemployment rate remains elevated at 10.7% in the last quarter of 2022.

“To increase the minimum retirement age, the government also needs to consider the impact on productivity, as workers in older age groups are usually linked to limited health and physical conditions.

“These factors can also affect the quality of work, mental health and affect operating expenses of an organisation,” the ministry adds.

For this year’s Labour Day celebration, the ministry’s theme is “Pekerja Pemangkin Wadah Malaysia Madani”, which is a reflection that our workforce is the backbone in supporting Malaysia Madani's aspirations.

“Together we will achieve the vision of Malaysia Madani which upholds the principles of well-being, justice and mutual respect,” the ministry adds.

Not now, say groups

They don’t always agree, but workers and bosses are on the same page about this – it isn’t the right time to increase our retirement age.

Malaysian Employers Federation president Datuk Dr Syed Hussain Syed Husman points out that youth unemployment is still high, while overall unemployment is at 3.7%.

Raising the minimum retirement age would hamper efforts to reinvigorate Malaysia’s labour market and overall economy.

“The previous revision of the retirement age from 55 to 60 was made in July 2013.

“This move led to a loss of about a million job opportunities for fresh graduates.

“This is because employees that were supposed to retire at the age of 55 automatically continued their services up to 60,” he says, noting that about 200,000 private sector employees in Malaysia retire annually.

Noting that some workers prefer to work beyond 60 as they don’t have enough savings, Syed Hussain says allowing a later retirement gives older workers a longer stream of income in an ageing society.

“Older employees tend to be more loyal to a company and have more experience and skills.

“Age does not necessarily equate to lower productivity or adaptability.

“However, it may be challenging for the employers.

“This is especially so for those who are employed in physically demanding work such as in construction, plantation and manufacturing.

“A blanket increase of retirement age will likely push up the employer's medical costs especially when many insurance companies are not keen to give insurance coverage to older workers,” he points out.

This is why employment beyond 60 years should be based on mutual agreement between bosses and workers.

“A better approach is to adopt a re-employment policy for those above 60 years on a contractual basis which would allow flexibility for both employees and employers.

“Placement of those beyond 60 years would be on a fixed term contract,” he says.

Make it a choice

Malaysian Trades Union Congress president Mohd Effendy Abdul Ghani also believes the minimum retirement age should stay at 60 for now.

“As people age, they may face physical and mental health challenges that make it difficult to continue working.

“Therefore, raising the retirement age may not be feasible for all workers, and could potentially lead to a decline in productivity, and increase healthcare costs,” he says.

He too agrees that increasing the retirement age could limit job opportunities for younger workers who are just entering the job market.

Data from the Statistics Department showed that in the first quarter of 2022, senior citizens aged between 55 and 64 constituted 7.7% of the job market.

Mohd Effendy says while some retirees may prefer to continue working if they are able to, others may wish to enjoy their retirement without the need to work.

“That’s why it ultimately depends on individual circumstances and personal preferences.

“It is also important to note that the decision to continue working should be made based on personal choice rather than necessity.

“Retirees who continue working should ensure that their employment does not compromise their health, well-being, or quality of life in retirement,” he adds.

Civil servants also prefer the retirement age, as it is.

Congress of Unions of Employees in the Public and Civil Service secretary-general Abdul Rahman Mohd Nordin says a survey was conducted among members and most were not keen on retiring later at 65.

“Some wanted to retire earlier, between the ages of 55 and 60,” he says.

Among the reasons why public servants do not want to retire later is due to health issues that come with age, while others felt supported by the pension system.

“We hope the government will continue to have the best interest of civil servants at heart,” he adds.