KUALA LUMPUR – A more inclusive social protection system is needed in Malaysia as it is currently narrow and inadequate, with only 9.1% of intended beneficiaries being covered versus an average of 55.1% for Asia and 12.8% globally.
The Employees’ Provident Fund’s (EPF) chief executive Datuk Seri Amir Hamzah Azizan said old-age dependency is also showing an increase from every 10 working-age adults needed to support one older person in 2020 to three working-age adults in 2050.
“With Malaysia’s population aged 65 and above growing faster than other age groups, the time for change is now,” he said in his opening remarks at the International Social Well-being Conference (ISWC 2023) today.
The ISWC 2023 is a two-day event jointly organised by EPF, the Finance Ministry, the Implementation Coordination Unit under the Prime Minister’s Department, and the International Social Security Association.
With the theme of “Changing the Game: Building the World We Want,” the event is aimed to address critical gaps in social security coverage and advocate for the fundamental rights to social protection.
Meanwhile, Amir Hamzah said the issue of savings adequacy has also impacted EPF members’ retirement well-being.
The benchmark EPF used to determine basic savings achievement by age is RM240,000, which serves as the minimum target upon reaching the age of 55, amounting to RM1,000 per month over a 20-year retirement period.
As of May 2023, Amir said that only 30% of its active formal members meet basic savings by age, while only 18% of its total members meet the same threshold.
“Indeed, the inadequacy of retirement savings is worrying, as it highlights deep-rooted contributing factors, such as a low wage structure, misalignment between full withdrawal age and retirement age, inconsistent contributions and under-employment, as well as a low rate of financial literacy.
“As the EPF’s membership now reaches a large network of 15.8 million members, we strive to implement long-term strategies to create a positive impact and foster well-being,” he said.
Among others, Amir said EPF is now focused on extending EPF coverage and enhancing members’ retirement savings adequacy.
With only 56% of Malaysia’s 16.7 million labour force having some form of formal social protection coverage, EPF has deployed mobile units to reach out to seven million people in the informal sector and self-employed who could become EPF members.
Amir said that the EPF is also exploring various other approaches, including a basic income drawdown option to strengthen its decumulation offerings to provide members with an additional source of retirement income.
“The establishment of Pillar 1 of the International Labour Organisation’s Multi-Layer Income Framework is also another area that the EPF is actively studying through the introduction of a contributory national pension,” he added. – Bernama, July 5, 2023
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