As Covid eats into old-age savings, there's a rising push in Malaysia to share the burden of retirement

The Employees Provident Fund's (EPF) recent warning about the depletion rate of retirement savings among its members has reignited the debate over old-age income security, prompting public policy experts and politicians to question whether the current pension system is adequate to provide retirees with a comfortable post-work life.

Malaysia's retirement dilemma predates Covid-19, but the pandemic's unprecedented scale means there is a greater urgency to rethink social protection policies for the elderly and find immediate solutions, experts said, citing data that indicates a potential old-age crisis if elected officials do not act now.

While the Covid-19 early withdrawals exacerbated the problem of funds insufficiency, the challenges of poor coverage and savings predate the epidemic, according to a paper released last month by the Khazanah Research Institute.

"Malaysia's pension programme does not provide a pension floor or adequate consumption smoothing for the vast majority of the population," according to the research.

Many people have discussed the idea of a universal social pension, which has already been implemented in many Asian nations.

According to Nur Thuraya Sazali, the principal author of the report's chapter on old-age social security, "a universal social pension plan supported by taxpayers is viewed as one of the most successful because it lowers the probability of people being excluded and extends coverage quickly."

“In general, a universal social pension or a social pension that is available to all older folks and is entirely tax-funded is the most ideal,” she told Malay Mail.

"It's the simplest to administer, and it's been suggested that it's the most successful at reducing exclusion error and delivering the quickest full coverage."

Nonetheless, many social protection specialists regard this gold standard as an exception to the rule, owing to the fact that such a programme is probably pricey.

From 108 countries observed, just a fifth has a universal social pension scheme that pays out a flat benefit to all persons above a certain age. According to the KRI research, universal social pension is most common in developing nations outside of Europe and Central Asia.

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