Professor UM says pension reforms are needed.

Petaling Jaya: The Social Wellbeing Research Centre at Universiti Malaysia’s Emeritus Professor Datuk NormaMansor says that reforms to pension schemes are necessary so that Malaysians aged 60 and older have income security.

She proposed a multilevel pension scheme that would replace the Employees Provident fund (EPF) as well as public pension schemes.

She said that “currently, about 50% of the workforce does not participate in the EPF program, and women are less likely to be involved in the EPF program because they often work in unpaid jobs or caregiving roles.”

She proposed a multi-tiered pension plan that would give every Malaysian a retirement income.

She said that the first tier of a pension plan can be funded by taxation.

We should encourage the government to expand the tax base, and rationalise the subsidies to redistribute income to those who are in need.

She said: “The second level would require contributions from all adult Malaysians to a national fund of solidarity, essentially providing a cross subsidy from the wealthy to the poor.”

She stated that the contributions of individuals would be capped, for example from a minimum RM60 up to a maximum RM400.

“Norma” said, “Those who can’t afford it should be supported by the government, as in Japan.”

The third tier will be similar to the current EPF but with more flexibility. It could include a mixture of fixed monthly payments and lump-sum payouts.

Mansor stated that as a country that is ageing, it is necessary to change the current model to provide social security to the elderly.

She said, “I’m optimistic we will get there and that continuous reform efforts are necessary.”

On Tuesday, Datuk Anwar Ibrahim said that only 29% Malaysians have pension-like income at retirement. He spoke about the need to seriously reform the national pensions system.

The data from the EPF shows that four out of five members have exhausted their savings in the first five years following the withdrawal age.

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