PETALING JAYA: Reforms are needed for pension schemes so that all aged Malaysians have income security, says Universiti Malaya’s Social Wellbeing Research Centre director Emeritus Prof Datuk Norma Mansor.
She proposed a multi-tiered pension scheme to replace both the Employees Provident Fund (EPF) and public pension schemes.
“Currently, around 50% of the workforce is not under the EPF scheme, and women have a lower participation rate in EPF because many take part in informal jobs and caregiving roles,” she said.
The multi-tier pension scheme she proposed would entitle every Malaysian to a retirement income.
The first tier of this pension scheme can be funded through taxation, she said.
“We should push for the government to broaden the tax base and better rationalise subsidies so that income can be redistributed to those in need.
“The second tier would involve contributions from every adult Malaysian to a national solidarity fund, effectively providing a cross-subsidy from the rich to the poor,” she said.
She said that contributions by the people would be capped at certain amounts, for example, from a minimum of RM60 to a maximum of RM400.
“For those who cannot afford it, the government should contribute on their behalf, similar to the approach taken in Japan,” Norma said.
The third tier would resemble the current EPF model but introduce flexibility, including a mix of fixed monthly payouts and lump-sum withdrawals.
Mansor said that, as an ageing country, changes to the current model are needed to ensure social security for the elderly.
“I am optimistic that we will move there, and continuous efforts to push for reform are needed,” she said.
On Tuesday (June 4), Prime Minister Datuk Anwar Ibrahim said that only 29% of Malaysians had pension-like income upon retirement and spoke of the need for serious reforms to the national pensions framework.
He said the lump sum nature of the EPF had caused many aged individuals to have insufficient funds, with EPF data showing that one in four members exhausted their savings within five years after reaching withdrawal age.
