Safeguard for youth or missed opportunity?

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MALAYSIA’S decision to retain the retirement age at 60 is a cautious move that balances fiscal sustainability and youth employment opportunities – but it risks falling behind regional peers who have extended working lives to reflect longer life expectancy.

The policy is pragmatic in the short term, yet arguably regressive when compared to progressive reforms in Asia.

Communications Minister Datuk Fahmi Fadzil explained that there was “no need to implement an increase at this time” (“No raise: Retirement age for civil servants remains at 60, says Fahmi”, The Star, July 8; online at bit.ly/4vUXLAJ).

This decision comes after years of debate, including in Parliament, with proposals to raise the age to 62 or even 65, citing longevity and insufficient retirement savings among Employees Provident Fund (EPF) members.

Pros of retaining retirement age:

> Youth employment opportunities – Keeping the age at 60 opens more positions for younger graduates, addressing concerns about limited job mobility in the civil service.

> Fiscal prudence – Extending retirement would increase pension liabilities and healthcare costs. Maintaining it at 60 helps manage government expenditure.

> Health considerations – Not all workers remain fit for demanding roles beyond the age of 60, especially in physically- intensive jobs.

Cons of retaining retirement age:

> Longevity trends – Malay-sians are living longer, with life expectancy around 75 years. Retiring at 60 leaves a long post-retirement period, often without sufficient savings.

> Loss of expertise – Critical sectors such as healthcare, academia, and research risk losing experienced professionals prematurely. Experts have suggested extending retirement for “critical posts” to 62 or beyond.

> Silver economy potential – Early retirement reduces opportunities for older citizens to contribute productively to the economy, weakening Malaysia’s competitiveness in the ageing society era.

Across Asia, Malaysia’s decision to retain the retirement age at 60 places it on the more conservative end of the spectrum.

In Singapore, the retirement age has already been raised to 63, with plans to move it to 65 by 2030, alongside re-employment schemes that allow older workers to remain in the workforce.

Thailand, like Malaysia, keeps its retirement age at 60, though discussions about reform are ongoing.

Indonesia varies by sector, with retirement ages ranging from 58 to 65, and professors permitted to serve until 70.

In Japan, the retirement age is set at 65, with re-employment opportunities extending up to 70, reflecting the country’s high life expectancy and ageing population.

China maintains a differentiated system: men retire at 60, women in white-collar roles at 55, and women in blue-collar roles at 50, though gradual reforms are planned to extend working lives.

Placed against this backdrop, Malaysia’s stance appears cautious. This suggests that Malay-sia’s decision is pragmatic in the short term but risks being seen as regressive when compared with regional peers who are embracing longer working lives.

In the short term, the government’s decision to retain the retirement age at 60 can be seen as progressive because it protects youth employment opportunities and helps maintain fiscal stability. However, in the long term, the policy appears regressive as it fails to align with Malaysia’s rising life expectancy, global best practices, and the growing need to harness the expertise of older workers.

By holding back reforms, Malaysia risks being outpaced by regional peers who are already adapting their workforce policies to meet the challenges of ageing demographics.

As secretary of the Malaysian Institute of Retirement Manage-ment, I view the government’s decision as a cautious but ultimately regressive step.

While it safeguards immediate fiscal and employment concerns, Malaysia must prepare for the silver economy by gradually extending retirement age, at least for critical sectors, and by strengthening retirement savings mechanisms.

Without such reforms, the nation risks underutilising its ageing population and falling behind Asia’s progressive workforce policies.

Dr R. MUNISWARAN RAJOO

Honorary secretary

Malaysian Institute of Retirement Management