PETALING JAYA: An economist has urged the public to prioritise retirement savings early to avoid financial strain in later years.
It would also curb dependency on public assistance and government healthcare services.
Economist and Southeast Asia Lead of the Global Labour Organisation Prof Dr Niaz Asadullah said failure to prepare for retirement may force many to continue working well into old age, impacting on individual’s
well-being and overall productivity.
This concern is echoed in an Asian Development Bank-University Malaya survey published in 2023, which found that nearly two-thirds of Malaysians do not prioritise retirement savings, with 26% stating they might need to work until they die.
“Retirement savings shortfall could place significant strain on social safety nets.
“For individuals, inadequate savings may lead to financial insecurity, reliance on family members, or the need to work until old age.
“As healthcare costs continue to climb, an increasing reliance on government-funded health services by older adults could add to Malaysia’s fiscal burden,” he said.
The Strategic Retirement Agenda survey conducted by Retirement Fund Incorporated and the MyAgeing think tank at Universiti Putra Malaysia (UPM) released on Oct 22 also found that respondents are not taking retirement savings seriously.
Its project lead Dr Rosmah Mohamed, who is an economist at UPM, said the survey showed that only 19% reported saving consistently, 54% saved occasionally, while the remainder did not save at all.
“The last survey was conducted in 2017.
“So for the past seven years, attitudes have remained the same, with respondents listing basic expenses, debt repayment, and children’s education as the top three reasons preventing regular savings.”
Niaz said safety nets like the Employees Provident Fund (EPF) provide limited support, especially for those in the gig economy or informal sector.
“Malaysia could consider universal pension schemes, enhanced healthcare benefits for the elderly, and targeted subsidies for low-income retirees to improve support for the ageing population,” he said.
“While global trends show a growing emphasis on private retirement planning, awareness about retirement in Malaysia remains low,” he said.
Niaz added that as the World Bank projects Malaysia to become an aged nation by 2040, with 14% of the population aged 65 and older, a multi-pronged approach is critical.
He emphasised the importance of enhancing citizens’ ability to save through progressive wage schemes and workplace retirement savings programmes.
Additionally, investing in healthcare infrastructure and creating policies to incentivise delayed retirement for those willing to work could alleviate some pressures.
“Adjustments in retirement age and flexible employment options for older adults may help balance the demographic shift.”
Niaz said limited financial literacy and low awareness of retirement further worsen the situation, especially among the B40 community and young adults under 30.
Therefore, boosting financial literacy from an early age, promoting employer-sponsored retirement plans, and incentivising voluntary contributions to retirement funds are essential.
“Tax benefits for private retirement savings, and enhancing retirement education programmes, for youths and low-income earners, could help instil a savings culture.”
