Economist moots ‘superfund’ so all in B40 can have monthly pension

 

Economist Geoffrey Williams said merging several social welfare funds and schemes could enable those in B40 to receive monthly pensions. (Bernama pic)

PETALING JAYA: An economist has proposed the establishment of a fund to provide retirees at the bottom of the income heap with a monthly pension of about RM2,000 each.

Geoffrey Williams of Malaysia University of Science and Technology said what he would call a “superfund” could be created by merging existing government social security schemes, pension bodies and unclaimed assets.

This would include Socso, retirement fund incorporated (KWAP), the armed forces pension fund (LTAT), the national trust fund (KWAN) and unclaimed assets of deceased people.

He reckoned that these bodies held assets and money amounting to RM309.4 billion, more than enough to kick start the fund.

Geoffrey Williams.

Payouts from the fund would supplement the savings remaining in the beneficiaries’ Employees Provident Fund accounts, he said.

Williams, who is a fellow at the Malaysian Institute of Economic Research, told FMT he believed every B40 pensioner could get about RM2,000 a month from the fund even if it were to generate returns of only 5% a year.

“Other funds, such as those under the federal and state governments or even private ones, can also be merged into this superfund,” he said.

He said his proposal was more realistic than any expectation that those in B40 could save enough to survive in their twilight years.

EPF chief strategy officer Nurhisham Hussein previously estimated that Malaysians would need a nest egg of RM900,000 to RM1 million for a comfortable retirement. He said the estimation was the “bare minimum” after accounting for inflation and medical costs.

Williams said he believed this was a conservative estimate, adding that most would struggle to accumulate such an amount.

Juita Mohamad of the Institute for Democracy and Economic Affairs also described the EPF’s estimate as conservative and said existing social protection plans needed to be reformed.

One such reform, she said, would be a social protection mechanism to cover workers in the informal economic sector.

She said such workers, unlike those in formal jobs, did not have a proper social protection plan for their retirement. - FMT