A comment piece by former assistant secretary-general for economic development at the United Nations (UN), Jomo Kwame Sundaram, better known as Jomo KS, highlighted the challenges that the country is about to face as Malaysians are not prepared to become an ageing nation.
He pointed out that research has shown the life expectancy of Malaysians is on the rise but most people do not have enough savings to retire comfortably. Jomo cited statistics from the Employees Provident Fund (EPF), whereby only 18% of members have reached the targeted minimum savings (RM228,000 by age of 55) set by the EPF board.
“Low (EPF) investment returns and withdrawals permitted – for housing, health and education – imply even less for retirement,” he said.
“More than two-thirds (68%) of EPF members aged 54 had less than RM50,000 in EPF savings! With the household poverty line income at RM930 monthly, RM50,000 in savings will only last 4.5 years. The bottom fifth of EPF members have average savings of only RM6,909!”
Commenting further, Jomo said that EPF has failed to serve its primary stakeholder – retirees – due to political interference
He noted that the EPF has diversified its investments in search of higher returns but it still does not provide “most retired employees with enough to live above the poverty line after retirement”.
“EPF and other retirement fund professionals need to be allowed to do their jobs to best serve their primary stakeholders, namely retirees, current and future. But political interference is preventing EPF professionals from serving members’ interests better.
“EPF members do not appreciate their retirement funds being used to buy low yielding US infrastructure funds. The Malaysian public does not want government leaders to sacrifice their interests to curry favour with a foreign leader, especially one who has never offered any concessions to advance our national interests,” he said, in reference to Prime Minister Datuk Seri Najib Razak’s proposal to use EPF funds to support US redevelopment programmes.
Meanwhile, a professor from University of Malaya (UM) also said that most Malaysians cannot survive on EPF savings alone
Bernama reported yesterday, 25 October, that Professor Datuk Dr Norma Mansor said most Malaysians do not have enough money to sustain themselves throughout retirement, despite saving a portion of their income with EPF. The Director of Social Security Research Centre (SSRC) at UM, explained that this is particularly true for low-income workers, informal, and self-employed workers.
Citing a study by the SSRC, Norma said that most EPF members who make withdrawals before the age of 55 are most likely left with an EPF account balance of less than RM50,000, while a handful would have more than RM400,000 and a few would have nothing left.
According to Norma, there is a cause for concern due to the current economic uncertainty, and escalating cost of living and healthcare.
Previously, Norma suggested two recommendations in order to cope with the population’s changing age structure during these challenging times
She told reporters at an international conference on social protection earlier this month, that people should consider remaining in the workforce even after reaching the retirement age, or the policy makers should work towards introducing a universal social pension.
“We are talking about an economy where individuals have to look at other options. One option is to go back to work after retirement. The government can consider providing incentives to employers to rehire retirees, which is (being) done in Singapore.
“Alternatively, the government could provide basic universal pensions for the poor. There is the (RM300 monthly) ‘Bantuan Orang Tua’ (senior citizen financial assistance offered by the women, family and community development ministry), but you have to prove that you are really poor (for that),” she was quoted as saying by The Edge Markets.
She also cited an example in Thailand, where senior citizens receive a monthly pension of THB500 (RM63.47) to support them in their old age.
Source : http://says.com/my/news/most-malaysians-don-t-have-enough-money-to-retire-economist-says