In the olden days, a couple would raise a large family to help in the fields. When they grew old, their children would care for them.
Today, we hear stories of grandparents dumped at bus-stops with all their possessions crammed into a single plastic bag. It is becoming more common for families to leave their aged relatives to die in nursing homes?
On October 25, Malaysian economist KS Jomo, issued a stark message about Malaysian retirees, although it is doubtful if many people heard him. He warned that retirees were unable to live comfortably on their retirement savings, and that depressed wages, low EPF investment returns and high household debt, were failing Malaysians.
The age factor: Jomo said that by 2035, people who are 65 years or older will comprise 15% of the population. He also postulated that the person who retires at 55, with no major health problems or outstanding debt, and savings of RM194,000, would have to survive on RM25 per day (or RM810 per month).
This is not much. So, how will the government address this problem? Should employers raise EPF contributions and can employees afford to have a greater deduction from their wages? The cost of living is already high and EPF payments may still not be enough to provide a good retirement.
Young supporting the old, migrants versus local workers: Although the EPF has raised the minimum savings target by age 55 to RM228,000 from RM197,000, Jomo warned that only 18% of EPF members had amassed that amount of money, and that it seemed likely that only half of EPF members would meet this revised minimum level by 2021.
He also said EPF records showed 68% of EPF members who were 54 years old, had less than RM50,000 in savings. If that was not bad enough, he said that the bottom 20% of EPF members, had saved only about RM6,909.
Is Malaysia a victim of its own economic success? We import foreign labour and this depresses wages. So, few locals are willing to do the jobs which are now done by economic migrants and foreign labour. We have lost many of our best brains to foreign countries, but we happily accept foreign labour, to the detriment of our own workers.
Low investment returns and non-active EPF accounts: Jomo highlighted the EPF’s low investment return and said that after people had withdrawn money from their EPF accounts for housing, health and education, they may not have enough left for retirement.
From a population of 32 million, 69% were of “working age”; however, Jomo claimed that only 48% of the 14.5 million of the population who were actually holding jobs, had active EPF accounts. Those in casual employment, or the self-employed, do not have active EPF accounts.
One retiree said, “I do not agree with an increase of the retirement age. I do not wish to work till I drop, nor do I want to face a life of poverty, after retirement.
“I have already exhausted my life savings and am now dependent on my children.”
Another retiree said, “Some people cannot work beyond the current age of retirement, either because they have serious health problems, or because they are caring for an elderly relative.
“Jomo said that EPF investments have low yields. The PM went to Washington and invested EPF money in “making America great” again. Was he helping President Trump, or us?
“Will the EPF money dumped into the development of the Battersea power station help Malaysians or only Londoners?”
Mariam Mokhtar is an FMT columnist.
The views expressed are those of the author and do not necessarily reflect those of FMT.