KUALA LUMPUR, March 19 – Malaysians are urged to take immediate measures to ensure they can retire comfortably, taking into account the average life expectancy of 77 years, rising inflation and the depletion of retirement funds nowadays.
Actuarial Society of Malaysia (ASM) President Aiza Yasmin Benyamin said that Malaysia is rapidly moving towards an ageing population where there will be an increasing burden on the younger tax-paying population to meet the cost of healthcare and welfare of older Malaysians.
In an ASM seminar on retirement held recently, Aiza Yasmin said in the private insurance and takaful sector in Malaysia, there are currently no products that target protection in old age such as post-retirement medical care, long-term care, and life annuities.
She also quoted a report from the World Economic Forum report encouraging building financial resilience across key life events, prioritising healthy ageing – which includes supporting living with illnesses and access to healthcare and impartial financial education to empower individuals to make informed financial decisions.
Meanwhile, Fellow of the ASM Syed Hamadah Syed Othman said that similar to medical takaful or insurance, retirement product is now a necessity in life, just like food or shelter.
Syed Hamadah who is also the board member of the Private Pension Administrator Malaysia (PPA) said there are six key factors to ensure a sustainable retirement.
“First, make it compulsory for all to have a retirement product. Next is encouragement by the government such as a valuable tax incentive. Third and fourth are financial awareness and health awareness, respectively.
“Then, economic growth in order to provide good returns on investment. Finally, availability of long-term duration assets for the retirement fund to invest in,” he said.
Meanwhile, Deputy Chief Executive Officer and Practice Professor of Asia School of Business Dr Joseph Cherian said a good pension or retirement system includes keeping the system simple and easily understood and communicated, no early withdrawals and capped lump sum.
He said the pension fund should also be managed at a low cost so as not to erode return on investment.
“Based on the Mercer Institute Global Pension Index 2023, Malaysia is only graded as C. The low grade is partly due to the withdrawals of retirement funds allowed during the COVID-19 pandemic.
