Malaysia has the third best retirement plan in Asia

[ASEAN NOW Content Team]

 

Despite a modest decline in the country's total index value from 60.1 in 2020 to 59.6 in 2021, Malaysia's retirement system is ranked third in Asia and 23rd globally.

According to the Mercer CFA Institute 2021 Global Pension Index, which is based on a survey of 43 retirement income systems throughout the world and measures each one using three weighted sub-indices, this is the case (adequacy, sustainability and integrity).

Malaysia was also ranked third among Asian retirement systems and 19th among 39 retirement income systems worldwide in the 2020 rating.

 

Malaysia improved its adequacy score to 50.6 this year, one of the three sub-indices examined in the 2021 index.
Integrity received the best grade (76.8), followed by sustainability (57.5) and adequacy.

Malaysia is ranked 15th in the sustainability sub-index, which assesses the system's ability to provide benefits in the future; 20th in the integrity sub-index, which considers factors affecting citizens' trust in the retirement system; and 34th in the adequacy sub-index, which assesses how the country's system is designed to provide adequate retirement benefits.

 

"This year, Malaysia's pension system was downgraded from a C+ to a C-, indicating that it has some positive aspects but also significant risks or flaws that need to be addressed."

 

"The Malaysian system received the same grade as several other Asian economies, including China, Indonesia, and Taiwan," Mercer said in a statement on Tuesday.

 

According to Janet Li, Mercer's wealth business head for Asia, "it is positive that Malaysia continues to obtain scores that were considerably above the Asian average in each of the three sub-indices."

 

As life expectancy rises, the government may consider measures to boost the minimal level of support for the poorest retirees, as well as the labour force participation rate, particularly among the elderly, according to Li.

"If Malaysia can also increase household savings while decreasing household debt, it will assist to improve both its adequacy and sustainability ratings, as well as the overall index value of its retirement system," she noted.