An ageing population and the need for a retirement safety net

 

From K Veeriah

When workers were enticed to withdraw their Employees’ Provident Fund (EPF) savings to sustain themselves during the Covid-19 pandemic, it resulted in only about 3% of them having adequate savings to afford retirement.

Thus, the indisputable fact is that our working population is stranded with inadequate savings, or none whatsoever, post-retirement.

Given that our population is fast reaching an old-age society, and coupled with the fact that they don’t have sufficient post-retirement savings, our nation may well be heading towards a future that will witness growing poverty.

Without sustainable post-retirement savings, our “warga emas” (senior citizens) will either be compelled to continue working or become dependent on the goodwill of society for survival unless the government initiates an appropriate social safety system to address the situation.

The Malaysian Trades Union Congress believes that it is possible to implement a comprehensive post-retirement safety net if the government can do the following:

• Merge EPF and Socso so as to consolidate their resources to introduce a retirement safety scheme. We understand that EPF’s investment assets are about a trillion ringgit, and Socso’s asset size is in the billions. With such massive financial assets, and through prudent returns on investment, we are convinced that a post-retirement safety system is possible.
• Set aside say 1% of taxes collected. With the consolidation of EPF and Socso and with an annual allocation of a portion of taxes collected to the said entity, we believe that a retirement safety scheme may well be possible.
• Enhance existing statutory EPF contributions. This will increase savings with the proposed consolidated EPF-Socso organisation, which, in turn, will enable the sustainability of our suggested old-age support scheme.
• Move towards a living wage. While progressive improvements to the minimum wage is welcomed, it does not meet the threshold living wage module expounded by Bank Negara Malaysia. According to the central bank, an individual needs a living wage of RM2,700 to sustain him or herself. By moving towards a living wage, it would, consequentially, translate to higher savings, again, with the proposed consolidated entity.

Taking cognisance of a fast approaching ageing society, we urge the government to consider our proposals. And we believe the government ought to consider our suggestions in formulating its 2023 budget. - FMT

K Veeriah is Penang division secretary of the Malaysian Trades Union Congress.

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.