PETALING JAYA: An employers group has urged the government against imposing the full income tax on those who opt to continue working beyond retirement age.
The Malaysian Employers Federation (MEF) said the government should instead levy “preferential tax” on such workers.
“If they are willing to work beyond their retirement age, I would suggest that the government not tax them fully for their income,” MEF executive director Shamsuddin Bardan told FMT.
“Companies would want to offer them jobs because of their experience.”
He was responding to the finance ministry’s economic outlook report for 2019, where the government expects the number of people aged 65 and above to increase to 2.4 million by 2020.
The report added that Malaysia was expected to become an ageing nation in two years’ time.
It said an ageing society would impact economic growth as it would mean lower participation in the labour force.
“The government will also have to spend more funds to pay more pensioners. Our current pension scheme may not be sustainable in the long run as it places a financial burden on our fiscal position,” the ministry said.
The current retirement age for Malaysians is 60.
The government proposed several measures to reduce the effect of population ageing, including for retired workers to be re-employed or given a “gradual retirement” option.
“These plans for them to stay in the workforce after retirement age will benefit themselves, employers and the country because they can then continue to contribute to the Employees Provident Fund and tax collection,” the report said.
Shamsuddin said what was needed was a change in mindset towards those who continue working past retirement age.
“They should not be seen as people who don’t get financial support from their family members,” he added.
Financial planner Carol Yip agreed that an ageing nation did not necessarily mean an end to retirees’ careers.
“I would look at this ‘silver economy’ positively, where we can provide services or products that cater to their needs.”
She added that more senior people would feel empowered if they were still contributing to society.