NOW THIS IS WHAT WE SHOULD BE DISCUSSING

Whatever it may be, suffice to say that most of us will not have enough money to survive unless we continue working till the day we drop. But then how many of us have that option to continue working till age 70 or 75 and earn good money on top of that?

NO HOLDS BARRED

Raja Petra Kamarudin

Please read the Malay Mail Online news report below regarding what Nurul Izzah Anwar said today. Now this is what we should spend more time discussing. I have, in fact, written a few articles about this matter in the past but unfortunately those types of articles do not seem to attract much interest.

I remember attending one wedding reception some years back where one of the ex-Bank Negara Governors said that we would need about RM3 million in savings to comfortably retire considering that Malaysians are expected to live another 20 years or so after retiring.

That would come to RM150,000 a year or RM12,500 a month.

That figure would probably be suitable for a senior management person but someone like a ‘normal’ employee could probably get by with just RM5,000 a month or RM1.2 million, less than half that figure of RM3 million in savings.

Nevertheless, whether it is just RM1.2 million or RM3 million, both figures are beyond the reach of most Malaysians. And that would mean what Nurul Izzah said is correct. More than 80% of Malaysians are going to find the going very difficult once they retire.

Of course, this is very subjective. Some can get by with just RM3,000 a month. Others need at least RM10,000 a month to live comfortably. It would all depend on your lifestyle and where you retire, whether in Taman Tun Dr Ismail in Kuala Lumpur or in Gua Musang in Kelantan.

Whatever it may be, suffice to say that most of us will not have enough money to survive unless we continue working till the day we drop. But then how many of us have that option to continue working till age 70 or 75 and earn good money on top of that?

Back when I just started working 40 years ago Malaysia used to be a very young country. The age of 70% of Malaysians was below 30. Now it is about 50:50 and as time goes on it is going to be the reverse of what it was 40 years ago, 30:70 of those below versus those above 30. And this is what is already the situation in the more advanced countries.

Currently, about 45% of Malaysia’s population is below 24. About 41% is between 24 and 54. And 14% is above 55. The growth rate is about 1.5%. For every one Malaysian who dies four more are born.

One even more important factor is that Malaysia’s urban population is now about 73% when at the time of Merdeka it was something like 80% of Malaysians lived in the rural areas (bad news for Umno). And the rate of urbanisation is 2.5% compared to the 1.5% growth rate. That means Malaysia’s urban population is growing at a faster rate than the rural population.

These are figures that every politician should be aware of because these statistics are cause for alarm. What it means is Malaysians are living longer (the average life expectancy is 75 and will grow to 80 by the time most of you retire), most Malaysians will be retiring in the towns and cities, the cost of living is getting too expensive, and very few Malaysians will have enough savings to afford to retire and live another 20 years or so after retiring.

Now, Nurul Izzah talks about the need to reform the salary and pension system to avoid a retirement ‘crisis’. That may be true and I, too, have talked about this many times myself. But the question is: how and what? It is fine saying that we must do something, which, of course, we must, but what is it that we must do and how to do it?

There are also those who say we need to reform the education system and the healthcare system. That, we must, no doubt, but what must we do about it and how to go about doing it?

The devil, as they say, is in the details. And this is why we have elections every five years or so and elect 222 Members of Parliament and another almost 600 State Assemblypersons. This is so that they can earn a huge salary and even bigger allowances and solve problems like these.

But alas, are they doing so?

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Opposition MP warns of ‘pension crisis’ if retirement system not reformed

(Malay Mail Online) – Putrajaya should reform the current pension system to avoid a retirement “crisis” for Malaysians who are past the legal working age limit, PKR’s Nurul Izzah Anwar said today.

The Lembah Pantai MP said statistics collated by the Employees Provident Fund (EPF) found that over 80 per cent of retirees lack sufficient savings when they stop working.

“There must be a push for pension and salary reform,” she said in a statement.

Citing the HSBC Future Retirement Survey, Nurul Izzah said 88 per cent of Malaysians worry that they might not have enough to cover daily expenses when they retire.

The EPF’s statistics also showed that 80 per cent of those hitting the age of 55 will not have enough savings in the retirement fund to live above the RM830 poverty line in Peninsula Malaysia, especially with over 75 per cent of its members earning less RM2,000 or less a month, she added.

Another factor was the relatively stagnant wages of Malaysian workers for the past 15 years, with their income lagging behind productivity, she said.

Nurul Izzah stressed that over 90 per cent of wage earners “do not enjoy meaningful income levels”, with only 11.05 per cent of government income earned from personal income tax from 1.7 million taxable workers out of the 12.4 million-strong Malaysian workforce.

She said strong governance and regulation of existing pension systems are needed for “operational efficiency and transparency”.

The PKR vice-president said Putrajaya also needs to expand the social safety net to make sure the elderly are cared for.

“Coverage in Malaysia is still far from universal and there remains substantial scope for further widening coverage,” she said, adding that a revamp of Malaysia’s pension system must provide adequate and sustainable savings for citizens when they hit retirement.

Last October, Malay Mail Online reported that EPF’s recent figures showed that approximately 70,000 active 54-year-old contributors have an average savings of just under RM167,000 last year. The recommended minimum savings level is RM196,800.

Last September, EPF’s chief executive Datuk Shahril Ridza Ridzuan revealed that 69 per cent of all EPF contributors of the same age have less than RM50,000 in their accounts.

The retirement age for both employees in the private sector and civil service is 60.