Malaysians may not be financially ready to retire


Study reveals the increasing vulnerability of Malaysians due to early retirement age as well as low rates of pension receipt under EPF and the lack of old-age poverty floor.


The Center for Strategic and International Studies (CSIS) Global Ageing Initiative has released a study on retire- ment attitudes and trends in East Asia’s rapidly aging emerging markets.

The new report, “Balancing Tradition and Modernity: The Future of Retirement in East Asia”, is based on a survey that CSIS conducted in Malaysia, China, Hong Kong, Singapore, South Korea and Taiwan.

Co-authored by Richard Jackson and Neil Howe, it is part of the multilayer Global Ageing Preparedness Project, which was launched by CSIS and British insurance giant Prudential plc in 2010.

Among the report’s major findings for Malaysia are: – Malaysia’s favourable demographics constitute an important advantage in building an adequate and sustainable retirement system. It is the only country in the CSIS East Asia Retirement Survey whose fertility rate is above the 2.1 replacement level and the only one that will have a growing population and workforce in the coming decades.

In China, the elderly share of the population will be approaching 30% by 2040 – and in Hong Kong, Singa- pore, South Korea and Taiwan, it will be approaching 40%. In Malaysia, it will still be under 20%.

– Malaysia’s early mandatory retirement age, however, offsets its demographic advantage. An astonishing 92% of current retirees report that they had already left the workforce by age 60. The survey reveals that Malaysia’s pattern of premature retirement will likely persist.

– Four out of five of today’s retirees worry about “being poor and in need of money”, becoming “a burden to their children,” and being “in ill health and having no one to care for them” – much larger shares than in any of the other survey countries.

Their vulnerability is attributable to Malaysia’s unusually early retirement ages, which leaves retirees at risk of outliving their savings, as well as to low rates of pension

receipt under the Employees’ Provident Fund and to the lack of an age-old poverty floor.

– Retirement prospects are improving for the younger generations, who expect to be less dependent on the extended family than today’s retirees are and to rely more heavily on their own savings. But with one in five current workers still expecting to receive no pension benefits of any kind, the outlook for many is far from secure.

Donald Kanak, Chairman of Prudential Corporation Asia, which is part of Prudential plc, said: “Responding to the challenges caused by an aging population is critical to Asia’s future. It is critical that policy makers and the industry work together to address this vital question.

“For 88 years, Prudential has been helping individuals and families in Asia plan for their future. We are pleased to partner with CSIS on the Global Aging Preparedness project, providing important insights into retirement expectations across the region.”

Charlie Oropeza, Chief Executive Officer of Prudential Assurance Malaysia Berhad, said: “The findings of CSIS Study reinforce the need for Malaysians to better plan and secure their financial position towards retirement.

“While the policymakers as well as the Malaysian government have been introducing frameworks such as the Financial Blueprint to provide greater length and breadth of financial products and services, Malaysians need to be more aware and make themselves financially ready through prudent investment decisions.

“As a leading private life insurer, we will continue to educate consumers on various aspects and solutions of retirement planning to secure their future and protect their long-term financial well-being.”

A copy of “The Future of Retirement in East Asia” report, as well as supplemental materials which include data, analysis and media coverage, are available on the project website at