Kuala Lumpur, 30 November – THE CALL for Malaysia to raise the retirement age has gotten stronger as the Covid-19 epidemic has further destroyed its residents’ finances.
There are also ideas to give fixed-term contracts, incentives for increased savings contributions, enhance total salary for employees, and improve their financial literacy.
Most Malaysians rely on their Employees Provident Fund (EPF) funds to cover their retirement obligations. The recent RM145bil withdrawals and RM10bil reduction in statutory EPF contributions resulted in lower savings for the majority of EPF members.
Approximately 6.62 million (52%) of EPF members under the age of 55 have savings of less than RM10,000, while 3.2 million members under the age of 55 have savings of less than RM1,000.
After accounting for inflation and medical expenses, we need at least RM600,000 to retire.
According to the EPF, just 4% of its members would be able to retire, with the bulk of members having less. According to Financial Planning Association of Malaysia vice-president Rafiq Hidayat,Malaysia faces a possible “post retirement crisis” when the majority of its working population is not ready to retire.
This will lead to an expanded “sandwich generation,” in which younger adults who have just started their own families will also have to care for their elderly parents’ post-retirement needs. Malaysia is becoming an aging country, with 7% of its population reaching the age of 65 or older; by 2056, that figure will have risen to 20%.
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