MY friends, if you are 60 years old right now and the mandatory retirement age in Malaysia has been raised from 60 to 65, will you continue working until you are 65?
Your answer, I guess, depends on whether you are healthy, whether you can still perform your job well, and whether you are financially strong personally. Lastly, of course, whether your company still wants you.
I am bringing up this issue this week because the Human Resources Ministry (KESUMA) is reviewing the proposal to raise the mandatory retirement age from 60 to 65.
Its Minister, Steven Sim Chee Keong, said on Friday that the matter was being examined by a special committee led by KESUMA’s Deputy Secretary-general (Policy and International), Dr Mohd Shaharin Umar, as it involved labour laws which fell under the ministry’s purview.
According to Sim, KESUMA will seek input and feedback from stakeholders, especially the public sector, workers and employers, during the study to ensure compliance with international best practices.
He added that the committee would look at the suitability of raising the retirement age in the country as there were pros and cons as well as challenges.
Sim explained that within the ministry, part of the labour market reforms involved reviewing all 28 existing labour laws.
The minister spoke a day after Prime Minister Datuk Seri Anwar Ibrahim told reporters in Kuala Lumpur that the proposal to raise the mandatory retirement age from 60 to 65 needed to be studied comprehensively first.
Anwar, who’s also the Minister of Finance, said before any decision was taken, the proposal would be discussed at the ministerial level first and then presented to the Cabinet Ministers.
“We have not brought it up to the Cabinet. Let them study its implications, such as finance, new job opportunities and so on.
“Let them review it because this is a proposal that ought to be given attention and considered,” said the Prime Minister.
A few days earlier, Minister in the Prime Minister’s Department (Law and Institutional Reform), Datuk Seri Azalina Othman Said, had proposed that the government consider raising the mandatory retirement age from 60 to 65.
Azalina who suggested this in her personal capacity, said it would be a loss when individuals were made to retire at 60 if they were still energetic, productive and capable of contributing to the workforce.
The debate on whether to raise the mandatory retirement age in Malaysia from 60 to 65 is not new.
In 2019, the Malaysian Government rejected the proposal amid challenges related to the youth unemployment rate.
In Malaysia, the mandatory retirement age for government employees is currently set at 60.
Under the Minimum Retirement Age Act 2012, this is also the minimum retirement age for private sector employees.
However, after reaching the age of 60, employees in the private sector may be employed on a contract basis.
As pointed out by the Human Resources Minister, Steven Sim, the proposal to raise the mandatory retirement age from 60 to 65 had its pros and cons.
Because they do not have to go to the work site or office anymore, those who retire at 60 can spend more time with their families.
They can also travel anywhere they like or even start a business venture.
With a lot of free time on their hands, they can also pursue hobbies they never have time for. They can do all these with peace of mind, provided they have enough money in the bank or their Employees Provident Fund account to maintain their new lifestyles and are in good health.
Malaysia’s minimum retirement age of 60 is to protect employees’ right to keep working at this age, helping them to build financial stability and prepare for retirement smoothly.
According to The Edge Malaysia, the Employees Provident Fund (EPF) now recommends that its members aim for at least RM390,000 in basic savings by the age of 60. This amount is to cover basic retirement needs for 20 years from age 55 to 75.
EPF also suggests “adequate“ savings of RM650,000 by age 60 or even “enhanced” savings of RM1.3 million. These recommendations are based on updated estimates of minimum monthly expenditure that a senior citizen needs to live a reasonable life.
Do you know that a study by think tank Khazanah Research Institute (KRI) has revealed that over 90 per cent of Malaysia’s EPF members under 30 do not have enough savings for their retirement?
KRI’s report titled ‘Households and the Pandemic 2019-2022: The state of households 2024’ showed that the insufficient retirement savings was partly driven by a series of COVID-19 related EPF withdrawal schemes.
EPF estimates that an individual needs to have at least RM35,000 in his/her EPF account by 30 to achieve basic retirement savings of RM240,000 by 55.
KRI, however, pointed out that the target basic retirement savings sum of RM240,000 must be discussed because it assumed that the individual would use RM1,000 per month for 20 years.
However, as the average Malaysian‘s life expectancy increased, the target of RM240,000 might not be sufficient, it added.
Hence, based on these arguments and calculations, personally I think it is perhaps better for the mandatory retirement age in Malaysia to be raised from 60 to 65.
Besides ensuring sufficient retirement savings, research has proven that those who work longer tend to have better physical and mental health than those who retire early.
Continued employment will also delay the onset of cognitive problems or other health complications.
The extended retirement age will also increase economic activities, boost economic growth, and improve the overall standard of living in Malaysia.
The extended retirement age will also help to address the challenges of an ageing population and ensure the sustainability of social security systems.
Do you agree?
The views expressed here are those of the writer and do not necessarily represent the views of Sarawak Tribune. The writer can be reached at adelinel888@gmail.com.
