KUALA LUMPUR: Malaysia can bolster its pension system by adopting the universal flat rate tax-financed pension scheme, said an expert.
This universal pension scheme is funded by revenue from taxation and guarantees that all citizens receive a minimum income upon reaching retirement age.
Development Pathways Ltd principal social policy specialist Stephen Kidd said universal pension means that when people reach retirement age, they will receive a pension at a fair amount.
He said that determining the same amount of pension for everyone would depend on the people’s willingness to pay taxes at a certain fixed rate.
“(In terms of retirement age), you can start at a little bit higher age, and reduce it over time, say from 75 or 70-plus (years old), and then reduce it in a few years down to 65-plus (years old),” he told reporters today.
When asked about the reform of the goods and services tax (GST) system, Kidd noted Sweden as an example where its citizens enjoy universal pensions alongside universal child benefits and are happy to pay taxes to receive something in return.
“People will assume that it makes sense to pay more tax because you live in a better society.
“That is why in other countries where you have higher tax (rate), for example, 45-50 per cent, people are very happy to pay (taxes).
“They do not complain as they are getting world-class services in return,” he added.
During the Milken Institute 10th Annual Asia Summit held on Wednesday, Prime Minister Datuk Seri Anwar Ibrahim said the government would need to reduce subsidies on the rich before reintroducing the GST. -Bernama