WHILE retirement is a time that marks the passage from a life of work to a life of accomplishments, leisure and choice, many people would agree that life after retirement is hard.
With various reports about ‘ageing society’ and ‘high cost of living’ coming into focus lately, it isn’t surprising to read about Malaysians being worried if they would be able to retire comfortable at all.
If we throw COVID-19 into the mix, the concerns become more profound, with retiring at the age of 60 no longer being considered a luxury.
This is why the Malaysian Government must heed the World Bank’s call to relook at its retirement age policy.
Indonesia, which has a younger population, has done it – from Jan 1, 2019, the retirement age is 57; it will rise by an additional year every three years until the retirement age reaches 65 in 2043. Singapore, too, has been proactive in this matter.
The island nation has put in place the Retirement and Re-employment Act. This act requires employers to offer opportunities for eligible employees who turn 62 to continue employment in the company until age 67.
In addition, should the company be unable to provide re-employment opportunities for the worker, it will be required to offer the worker an assistance payment of up to 3.5 months of their salary, up to a maximum of RM40,000.
So what’s holding Malaysia back?
Let’s look at this from an economic perspective. In an ageing society, it is simply not viable for people who can still be economically active to retire and allow the decreasing number of younger people to support them and become the main providers of economic growth.
This is because the economically active would be able to continue paying taxes and this would therefore contribute to an increase in government revenue, thus sustaining the country’s growth domestic product (GDP) growth and economic development.
The economically inactive, in contrast, are the major recipients of government spending such as pension and healthcare, thus negatively affecting the government’s deficit.
Furthermore, according to the latest statistics by the Department of Statistics Malaysia (DOSM), it is estimated that the number of older generation age 60 and above is expected to reach 5.8 million in 2030, making up about 15% of the total Malaysian population.
Shouldn’t this be considered as a strong reason on why those who can still be economically active must be allowed to continue contributing to the country’s economy?
That being said, the call by the World Bank must be heeded. If anything, the pandemic must serve as a wake-up call for the Malaysian Government to rethink its strategies to manage the challenges and opportunities of ageing, particularly in terms of changes and innovations in the relevant policy environment. – March 27, 2021