Press Digest - Civil servants may have to contribute to KWAP for as long as they work

PETALING JAYA: New civil servants may soon have to contribute to the Retirement Fund for as long as they work.
According to a report in China Press today, the government intends to make this move known in the upcoming budget announcement.
It is aimed at preventing Malaysia from falling into a public pensions crisis like what is facing the United States.
At present, civil servants make contributions to Kumpulan Wang Persaraan (KWAP) or Retirement Fund (Incorporated) for 10 years.
Said independent economist Lee Heng Guie: "Like private employees who contribute to the Employees Provident Fund (EPF), government servants need to contribute to KWAP. The different is government servants make contribution for the first 10 years, after which the government takes over and contributes to the fund on their behalf."
"At present, we have 1.6 million civil servants, who account for 11.2% of the total working population. The number is increasing every year and will increase the burden on the government in the long run. A pensions fund crisis (like that of the US) is just a matter of time."
Lee said that to deal with the massive pensions payout in the future, the government intends lengthen the period of contribution to KWAP for civil servants to perhaps until retirement, like what is being done by employees in the private sector.
Under the current regulation, private employees contribute 11% of their salaries to EPF while employers contribute an amount equals to 12-13% of the employees' pay.
Civil servants, however, contribute 17.5% of their salaries to KWAP to enjoy a pension of 40-50% of their last drawn salary upon retirement.