Experts say it’s time to reform pensions

PETALING JAYA – Experts say that there is a need to address the lack of lifetime payouts among most Malaysian seniors.

Senior research officer Chai S. Tyng, from the Malaysian Research Institute on Ageing at Universiti Putra Malaysia (MyAgeing), said that the only pension model which ensured a lifetime of income was the civil services pension and Socso benefits.

He said that the Employees Provident Fund was more like a retirement saving scheme, which provided a lump-sum payout.

Chai suggested as a reform that should be implemented immediately, EPF determines a monthly minimum amount to be paid out.

Chai suggested that long-term reforms be undertaken to create a fund of solidarity in which seniors would receive a lifetime pension.

He suggested that the government and employees contribute a small portion of their salaries to the fund.

He said that this model, which was adapted from Sweden’s pension system, allows fund redistribution. Older individuals will receive a minimum pension while those who are working will receive the basic pension in addition to their occupational pension.

“Furthermore the payouts must be rewarded with a guarantee of longevity, which means that the monthly payment will continue until the end of an individual’s lifetime.

The payouts would stop at the death of the individual and could not be transferred to their next-of-kin.

Cheah Tuck Wing, chairman of the Malaysian Coalition on Ageing (MCA), expressed similar concerns and suggested that all workers be required to contribute to EPF.

He said that a basic pension plan and long-term health care for the elderly should be mandatory for all Malaysians, both in the formal sector and the informal.

Amy Seok, founding chairperson of the Malaysia Literacy in Financial Education Association, has stressed the urgent need for proactive financial education.

Many have an EPF but not all are adequately educated about finances. She said that the EPF institution shouldn’t just be a saving fund, but also a centre for education to give reminders and information about financial planning.

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