Wider safety net for informal workers

Measures needed as 80-plus population set to triple by 2060

PETALING JAYA: Malaysia needs to boost the retirement savings of gig workers, the self-employed and others with irregular income in preparation to being an ageing nation, says the Employees Provident Fund (EPF).

“Many individuals in this category are in vulnerable situations due to insufficient social protection, making them prone to financial uncertainty upon retirement.

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“The EPF is actively engaging with groups such as gig workers and the self-employed to raise awareness about the importance of building retirement savings for their later years,” the EPF said in an interview with The Star.

In light of the country’s rapidly ageing population, the EPF was asked to comment on measures to ensure Malaysians have enough funds for old age.

According to figures from the Department of Statistics Malaysia (DOSM), it is projected that the number of people in their 80s and above in the country will more than triple by 2060.

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The number of people in this age group is expected to swell from about 380,000 this year to 1.67 million in 2060 – similar to the size of the current population in Pahang. This is based on DOSM’s Population Projections 2020-2060 report, which the department released last month.

Last year, it was reported that only 60% of the country’s 17 million labour force were covered by the EPF, leaving the 40% unprotected.

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According to earlier reports, most of those not covered by the EPF were in the informal sector, including freelancers and self-employed like gig workers.

The self-employed or those with irregular income can opt for voluntary contributions under EPF’s i-Saraan programme, which had 529,667 members as of last year.

The EPF said more active, formal contributors to the fund are achieving the basic savings level according to their age. This means more workers are on track to have the basic savings level of RM240,000 by the time they reach the age of 55.

“As of last year, 2.75 million or 37.3% of the active formal members aged between 18 and 55 met the basic savings threshold by age – a good increase from 2.21 million or 30.4% in 2022,” the EPF added.

The percentage is expected to grow in the future, even as the basic savings amount is gradually increased from RM240,000 to RM390,000 over the next five years to keep up with the times.

“By 2030, it is estimated that more than 50% of active formal members will achieve the new basic savings by age, based on the updated age range of 18 to 60 years,” it said.

The age benchmark for basic savings, which was previously set at age 55, has been revised to age 60 to better reflect the national retirement age in Malaysia.

Meanwhile, Malaysians who reach the retirement age of 60 may be allowed to continue working under flexible work arrangements if they are willing and healthy.

The Human Resources Ministry is studying a move to encourage bosses to provide such work arrangements or re-employment opportunities for senior citizens who are healthy and willing to continue working.

“The ministry will continue to study successful models from other countries and work with employees to support age- friendly employment policies in Malaysia,” it said when contacted.