By HARIATI AZIZAN
sunday@thestar.com.my
The Government's proposal to extend the retirement age to 60 for those in the private sector does not sit well with those who have plans to call it quits at 55.
FINANCE manager Chow* is 54 and looking forward to retirement next year.
“Honestly, it is the EPF (Employees Provident Fund) savings that I am waiting for. I want to pay off my house and car loans. I also need the money to help pay for my youngest daughter's college fees. She will sit for her SPM next year and then head off for university in Australia the following year,” he shares.
Needless to say, the Government's proposal to extend the retirement age to 60 in the private sector does not bode well with his plans.
“I don't mind continuing to work, but I hope the Government will still allow us to withdraw our EPF savings at 55. If not, all my financial planning will go haywire,” he adds.
It is the same story for Mina* who has been looking forward to a well-deserved rest after working for more than half her life.
“I started working straight after school and slowly worked my way up the ranks. Now I just want to enjoy life,” says the 53-year-old bank officer at a foreign bank.
Although the EPF has yet to make an announcement, many are understandably worried its chief executive officer Tan Sri Azlan Zainol has reportedly said that a retirement age extension was EPF's wish for Budget 2012.
As Azlan had put it, the long retirement period is one of the factors that contribute to inadequate retirement savings.
“When the fund was first set up in 1951, the full withdrawal age for our members aged 55 was the same as the Malaysian life expectancy then.
“But some 60 years on, while the full withdrawal age has not changed, the average life expectancy of Malaysians has increased to 75 years.
“Thus, Malaysians today need to save for a 20-year retirement span compared to a shorter one 60 years ago. This is a long period and one of the longest in Asean and the world,” he said in his keynote address at the Malaysian Private Pension and Healthcare Conference 2011 in September.
When contacted recently, however, the EPF had declined to comment, so as not to cause unnecessary confusion among members.
“We don't release information on matters that are still under consideration or are currently being studied. However, whatever decision we make, will always have members' best interest at heart,” assures EPF public relations general manager Nik Affendi Jaafar.
Prof Dr Tengku Aizan Hamid, director of the Gerontology Institute at Universiti Putra Malaysia lauds the Government's proposal to extend the retirement age in the private sector.
As she points out, Mina and Chow are more the exception than the norm here.
Most Malaysians simply have not made any decisions about what to do at retirement even whether they should stop or continue working at the stipulated age of 55 what more made any long-term plans, she argues.
“In a nationwide survey we conducted in 2009 for the review of the National Policy for the Elderly (under the purview of the Women, Family and Community Development Ministry), we found that less than 50% of the current generation of older persons have ever made plans for their old age,” she says, highlighting that only 31.5% of the respondents aged 60 years or over replied “Yes” to the question, “Have you made any plans for your old age?”
Many said they did not even have any savings, she adds, “Those who had savings said it was mostly for their children's wedding or higher education, or to buy a house.”
According to the survey, the majority of older persons who did not make plans for old age said that they never thought about planning for old age (42.4%), were leaving the matter to fate (36.6%) or expected their children to take care of them (29.3%).
Hence, a law imposing a later retirement age is good for the indecisive ones, opines Dr Tengku Aizan, as it will “force” them to save in the EPF for another five years.
Acknowledging the concern of those who have already planned for life after 55, however, she believes that the EPF Act, as well as other related acts, should be amended accordingly to allow people the freedom to make a choice.
“Allowance needs to be given to people to have a choice to retire earlier, at the age of 55. There are those who are prepared to retire, and if a person already has a retirement plan, they should be allowed to retire.”
But informed knowledge must be given to the workers before they make a decision, she adds.
“If you retire at 50 or 55, you need to know what benefits you can get like EPF withdrawal, health benefits and others.”
Dr Tengku Aizan points out that the retirement age is only one aspect of the social protection for the aged.
“We also need to look at other issues such as healthcare services and housing for the ageing population. It is better to have regulations to give you a choice to work after 55, but there are various related issues that the government needs to consider too such as social security and medical insurance for an older workforce.”
Other than coming up with various savings and other financial plans suitable for an ageing population, financial institutions like banks and insurance companies also need to change their mindset to allow for older people to make investments and take out loans, she urges, adding that the older generation should not be seen merely as financial risks.
Crucially, we need to provide more awareness and education, specifically on financial management, for people to prepare for old age from young, she adds.
“Especially since they cannot depend on their children anymore. In fact, now more and more children are depending on their parents.
“For one, more of them are living at home now and the majority of those declared bankrupt are in their 30s. This will only compound the problem in the future.”
* Not real name
Article copied and rearranged from http://thestar.com.my/news/story.asp?file=/2011/12/25/nation/10155893&sec=nation
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