Govt mulls reviewing retirement age

KUALA LUMPUR: In view of the high number of retirees who do not have sufficient funds to see them through, the government is looking to review the current retirement age of 60, said Human Resources Minister M. Kula Segaran.
He said this will allow working adults to have a better standard of living once they retire from the job market.
He said a large number of Malaysians - more than two-thirds (68%) of Employee Provident Fund (EPF) members aged 54 had less than RM50,000 in their EPF savings.
The minister said with this level of savings, they will not be able to live comfortably upon retirement, therefore by extending the retirement age, it will be a great help to them.
When asked what would be the new retirement age, Kula refused to reveal it, except that the government is looking at it, while jokingly saying that Prime Minister Tun Dr Mahathir Mohamad had announced 93 being the new retirement age.
"One of the main problems is that most working adults rely on their EPF savings to see them through their old age, and not many think of savings, investing or buying insurance.
"They must start looking at such other means to ensure that they have sufficient funds for retirement as more and more people are living longer due to the advancement in medical technology," Kula told theSun after the opening ceremony of the Regional Social Security Forum for Asia and the Pacific of the International Social Security Association.
He added one of the possible ways to get people to save is to get their employers involved in encouraging them to save for their old age.
He said upon retirement many people tend to withdraw all their money from EPF and end up spending it within a year, thus having no money to meet their future needs.
He said one of the main reasons is that many of them have never seen such a huge sum and caught off-guard when they get it.
"When EPF savings was envisaged by our forefathers it was a means of savings for old age.
"But also at that time they were looked after by their children and they did not need huge sums of savings. Things have changed today and older people are being forced to look after themselves and the amount of money they need may be higher than their EPF savings," Kula said.
Research by the Social Security Organisation (Socso) revealed that two in three Malaysians will live with less than RM950 per month until 75 while seven in 10 will live with RM210 per month until 75 or will have depleted their savings in less than two years.
The research also revealed that a majority of Malaysians have low salaries and low financial literacy no matter whether they are professionals or not.
Meanwhile, Malaysian Employers Federation (MEF) executive director Datuk Shamsudin Baradan said if the government is looking at extending the retirement age beyond 60, it is a good move but it should look at giving some kind of incentives to employers.
"By giving an incentive such as a tax break this encourages employers to employ those over 60 and it would be a win-win situation for both sides," he said, adding that employees should also be given preferential tax breaks.
He said one of the problems that may arise is that new graduates may not be able to get jobs because companies will be forced to keep employing the older workers.
Shamsudin said one worrying factor would be that some employees may just be marking time while unhealthy employees are also kept on the company's payroll.
"One of the options the government should consider should be a rehiring policy for those over 60 who continue to meet the employers' needs while at the same time contributing to the company.
"This will give companies the freedom to employ those who meet their needs," he said.
Shamsudin said the retirement age in Singapore is 62 and city-state had considered extending it to 67 but decided against it and in July this year introduces a rehiring policy.