High time to address pension reforms, say experts

PETALING JAYA: There is a lack of lifetime payouts for most Malaysian seniors and this needs to be addressed, say experts.

Universiti Putra Malaysia’s Malaysian Research Institute on Ageing (MyAgeing) senior research officer Chai Sen Tyng said the only pension-like model that ensured a lifetime income was the civil service pension and Socso compensation benefits.

“The Employees Provident Fund is more like a retirement savings scheme which provides a lump sum payout,” he said.

Chai suggested that as an immediate reform, EPF should determine a minimum sum to be disbursed monthly.

To secure the financial wellbeing of ageing Malaysians, Chai said long-term reforms should look into a solidarity fund in which all seniors should receive a pension for life.

He proposed that a small percentage of employees’ salaries should go to the solidarity fund, along with contributions by the government.

“This allows for fund redistribution; aged individuals can get at least a basic pension, while those who work will get the basic pension on top of their own occupational pension,” he said, adding that the model was adapted from the Swedish pension system.

“Furthermore, the payouts should be incentivised with a longevity guarantee, meaning that there will be a monthly payout till the end of the individual’s life.

“However, under this model, payouts will stop upon the individual’s death and cannot be passed on to the next of kin.”

Malaysian Coalition on Ageing chairman Cheah Tuck Wing shared similar concerns, and said all workers should be made to contribute to EPF.

“It should be made compulsory for all Malaysian workers both in the formal and informal sectors, and include foreign workers too,” he said, backing the call for a basic pension scheme and long-term healthcare for the aged.

Malaysia Literacy in Financial Education Association founding chairman Amy Seok emphasised the pressing need for proactive financial literacy education.

“Many have an EPF account but not all have adequate financial education. The EPF institution should not just be a savings fund but also an education centre to provide reminders and handouts about wise financial planning,” she said and urged the government to play a major role in elevating financial literacy.