KUCHING: Malaysia faces a delicate balancing act as it seeks to safeguard its elderly without overstretching public finances.
Universiti Malaysia Sarawak (UNIMAS) Faculty of Economics and Business senior lecturer Dr Afiza Abu Bakar said the country’s social pension debate ultimately revolves around balancing compassion with fiscal discipline, given that public debt currently stands at about 64 per cent of GDP.
“Expanding social pensions is important, but it must not weaken financial stability. Fiscal discipline and social care can work together if spending is targeted and transparent,” she told Sarawak Tribune.
Afiza said Malaysia must strike a careful balance between supporting vulnerable seniors and keeping reforms within its fiscal limits.
“Focusing first on the poorest elderly ensures that limited funds reach those who need them most. Starting small also helps test what works before expanding further,” she said.
Drawing an analogy to cooking rice, she added that fiscal management requires the same patience and precision.
“Spending too quickly can harm the budget, while spending too little leaves people behind. Finding the right heat keeps both the economy and the people well-nourished,” she said.
According to Afiza, this balance can be achieved through gradual expansion supported by evidence and clear monitoring to build public trust and long-term support.
She noted that other countries have shown that cost and compassion can coexist.
“In Thailand, the Old Age Allowance gives seniors a small but universal payment, while Chile combines personal savings with government top-ups for low-income retirees. Both systems show that generosity must be matched with fiscal care,” she said.
Malaysia, she suggested, could adopt a similar approach—starting with targeted aid through the Bantuan Warga Emas scheme and expanding gradually as fiscal space improves.
“Rushing into a universal pension would be costly and may not be practical now, but a focused approach can still bring meaningful progress,” she said.
Afiza emphasised that social pension reform should move in tandem with broader efforts to strengthen retirement security.
“Many Malaysians have less than RM10,000 in their Employees Provident Fund (EPF) accounts. Without tackling low wages and inconsistent savings, short-term cash aid will only ease temporary hardship,” she said.
She added that social pensions should complement, not replace, EPF and other contributory schemes, while better coordination between welfare, labour and financial agencies could close coverage gaps and improve efficiency.
“Modest but consistent payments, combined with active ageing initiatives such as volunteering or community work, can protect the vulnerable while keeping older Malaysians engaged,” she said.
Ultimately, Afiza said, both short-term assistance and long-term reform must progress together to ensure lasting impact.
“Cash assistance provides fruit for today, but reform nourishes the soil so the trees can keep bearing fruit in the future. One offers comfort, the other builds resilience,” she said.
She was commenting on a World Bank paper released on Oct 30, titled “Should Malaysia Expand Its Social Pension? Global Evidence, Design Issues and Options”, which aims to support the government’s policy reforms under the National Ageing Agenda.
World Bank country manager Judith Green said Malaysia is undergoing a rapid demographic transition and is projected to become an aged society by the mid-2040s and a super-aged nation by the mid-2050s.
“For better social pension schemes to materialise, there must be trade-offs taking place within the fiscal space,” the report stated.
Malaysia’s Bantuan Warga Emas (BWE) programme, introduced in 1982 for those aged 60 and above, remains too narrowly targeted — reaching only 4 per cent of the elderly population.
This, it said, is concerning given projections that by 2045, 14 per cent of Malaysians will be aged 65 or older, rising to 20 per cent by 2056.
Trade-offs are important in this instance — there are things that need to change. For example, raising the eligibility age is one way to address the challenge.
