High time to plan for ageing population
Lee Heng Guie 
Medical professionals and experts are of the view that the government may consider introducing an Aged Care Act – 123RF

SOUTHEAST Asian countries are beginning to follow the global trends of an ageing population. Thirteen years from today, Malaysia’s demographic structure will witness a dramatic shift as the older population (senior citizens) will account for about 15% of the total population in 2030 from 9.3% or three million last year. In 2000, it was 6.17%.

It’s not a matter of numbers, it’s about whether we have the necessary system and structure in place to support the ageing society. Early and swift actions must be set in motion as we have only 13 years from now to plan and implement the necessary initiatives to better meet and serve our older people.

Policy responses take a long lead and lag time for design and implementation.

The preparation of initiatives and programmes for the ageing population requires social, political and economic changes at all levels. The embracement of the ageing reality requires public institutions, public policies, private sector and family institutions to recognise the contributions of elderly, maintaining age-friendly society for older people to live healthily while at the same time facilitate continuing learning programmes to enhance their roles in society.

While the unprecedented demographic shift towards a higher proportion of the ageing population raises concerns about the impact on productivity, output and GDP growth, the risks of spiralling healthcare costs and the adequacy of public and private pension programmes, population ageing also presents business value propositions.

It is estimated that the global spending power of senior citizens will reach US$15 tril (RM63.45 tril) annually by 2020. Elderly consumers will spur demand for aged-friendly products and services in healthcare services, medical devices, pharmaceutical, housing, transportation, entertainment and leisure.

The fundamental approach and reform of public policies in crafting outcome-based policy responses should cover the aspects of safer living community, preserving human capital asset, social welfare, healthcare services as well as a sustainable retirement income and pension scheme.

On the provision of livable community for older people, we have to utilise resources efficiently and also adopt new technologies to build aged-friendly and safe security community service centres, cities and smart homes that operate on a remote well-monitoring and devices system to help older people live comfortably and manage their needs at ease.

The existing and new planning of public welfare department’s and private sector-run elderly-care homes and rehabilitation centres should start putting their thinking cap in designing and building an inclusive and pleasant environment for the ageing society.

With regards to workplace and labour market policies, there ought to have a radical change in the institutions and organisations’ behavioural approach in the handling of ageing workforce. This means rethinking public policies and business practices to develop aged-friendly human resource system to facilitate participation of older workers.


Thinkers and problem solvers

Older persons have with them knowledge, experience and insights that are valuable to the organisation in terms of reliability, institutional know-how, royalty and commitment. Not only are they thinkers and problem-solvers, but also serve as mentors and role models to the younger generation, bringing out synergy among the diverse age groups in the organisation.

The organisations’ HR policies should adopt appropriate solutions and mechanisms to provide the necessary training support as well as continuing learning during the transition period. This helps to ensure older workers’ knowledge and experience is not lost to the organisation.

This calls for a rethinking of retirement norms beyond the legal retirement age of 60 and encourage them to work longer.

How to work out a sustainable retirement income and pension scheme for older employees? The Employees Provident Fund (EPF) and private pension scheme provide retirement income buffer but are they sufficient enough?

The government needs to actively support older workers in ensuring sufficient savings towards retirement in terms of maintaining their employability and still able to work longer to build more retirement savings. The EPF can consider giving an additional dividend, says 1% on the first RM50,000 of the accumulated EPF savings, for employees aged 50 years and above.

The employers may pioneer a flexible private retirement scheme, which allows employees to reduce working hours and claim part of their pension while continuing to accrue further pension entitlements for when they fully retire.

Other policy changes to be considered include considering higher EPF contributions by employers to older employees, which most companies have capped at a fixed contribution rate and lower EPF contribution rate; altering health insurance; and critical illness policies to cover the higher risks as people age.

The health implications of an ageing population are double-edged. Not only are Malaysians living longer but also getting healthier. Statistics showed that in 2017, Malaysians are expected to live up to 74.8 years, an increase from 74.3 years in 2011. The life expectancy is 72.7 years for male and 77.4 years for female.


Advancement of technology

Healthcare expenditure and aged-care funding will rise higher, burdening the government’s fiscal finance, households as well as increased in out-of-pocket expenses of the elderly. As such, both public and private healthcare financing has become one of the pressing policy issues to be critically looked at currently.

With the advancement of technology in medical science research, both public and private medical services must collaborate to re-engineer our healthcare system, focusing on disease prevention and early health screening, rather than on expensive healthcare intervention.

The government may consider initiating a defined contribution to a National Healthcare Insurance Fund, and supplement with the Medicare and Medicaid programmes to ease the burden of financing healthcare services. The medical card’s premium must be exempted from the goods and services tax.

Some form of financial incentives and tax relief should be provided to households that bear nursing homes and aged-care expenses for the elderly. In developed countries, aged-care is granted with taxes or other reimbursement schemes. The medical professionals and experts are of the view that the government may consider introducing an Aged Care Act.

Lee Heng Guie is the executive director of Socio-Economic Research Centre (SERC), an independent research organisation

This article first appeared in Focus Malaysia Issue 254.