By K Veeriah
According to government statistics released, Malaysia is on the fast track to an ageing society.
It is, thus, obvious the government needs to devise a scheme to safeguard social security to provide for the financial survival of our ageing population.
No thanks to misplaced schemes allowing workers to dip into their Employees Provident Fund retirement savings, only about 3% of workers are left with sufficient EPF savings to sustain themselves after retirement.
While the RM101bn taken out from the EPF will probably translate into spending, which will help bolster the economy, the flip side is that about 97% of the working population will wallow in poverty, with no sustainable source of financial security after retirement.
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Unless this situation is addressed urgently, the nation will be confronted with an ageing population deprived of a sustainable financial, social security network in the not-so-distant future. This lack of a comprehensive post-retirement support system will have a spillover impact on our healthcare and welfare system.
Having regard to this, we suggest that the government considers:
1. Consolidating the EPF, Social Security Organisation (Socso) and other existing retirement schemes
The EPF is said to have investment assets of about a trillion ringgit. As for Socso, its reported asset size runs into the billions. Aside from these entities, other schemes such as Retirement Fund (Incorporated) (KWAP) have considerable funds and assets at their disposal.
We believe that, by consolidating these entities into a single corporation, a scheme to safeguard social security may well be possible.
With combined assets in the trillions, we believe there is a window of opportunity to formulate a comprehensive social security protection system to address the challenges of a rapidly ageing population.
To sustain a post-retirement support system, the consolidated fund needs to generate a rolling source of income. That can be realised through a prudent return on investments.
2. Setting aside a percentage of taxes collected towards the consolidated workers retirement plan
With the consolidation of the EPF, Socso and other bodies, along with, say, an annual 1% allocation from taxes collected channelled to the merged entity, it may well facilitate the implementation of a sustainable post-retirement scheme for retiring workers.
With the consolidated funds at its disposable and through returns on investments, an equitable post-retirement safety network can be realised.
3. Raising the retirement age
The indisputable fact is that life expectancy has risen. As such, we need to reconsider the mandatory retirement age of 60. A vast majority of retirees are still employed, albeit at exploitative wages and terms of employment just because they are over the retirement age of 60. Such exploitation can be eradicated if the retirement age is raised.
4. Moving to a living wage system
A Bank Negara study in 2018 said an unmarried worker needs a monthly “living wage” of RM2,700 to sustain himself or herself.
The study also revealed that, for a married couple with no children, the living wage should be RM4,500.
And for those who need to support two children, the living wage needs to be pegged at RM6,500.
In the light of this study, it cannot be challenged that our workers are grossly underpaid.
Professor Yeah Kim Leng from Sunway University’s Business School, among others, has said that, based on the current national minimum wage of RM1,200, workers have to supplement their incomes by talking on an additional job.
This means workers have to work excessive hours – like working overtime on their rest days or even on public holidays – just so they earn sufficient income to provide for themselves and their families.
Working excessive hours undoubtedly leads to a deterioration in both the physical and mental health of workers, which, if permitted to continue, would inevitably erode productivity.
Further, it would impose tremendous pressure on our already overworked and under-equipped public healthcare system.
So Malaysia must move to a living wage system as opposed to the minimum wage concept of wage determination.
5. Enhancing EPF rates
Undeniably, a correlation exists between rates of pay and contributions to the EPF.
Given the mismatch between the prevailing minimum wage and Bank Negara’s suggested living wage, workers’ contributions to the EPF for their old-age savings are undeniably pathetically devalued.
So, it is vital for monthly contributions to the EPF to be enhanced to provide sufficient savings for the workers.
We feel there needs to be a parallel shift of wage determination from the minimum wage idea to that of a living wage system so that EPF contributions can be progressively enhanced.
In conclusion, we argue that the limited scope of proposals set out here ought to be seriously considered in the interest of the workers’ post-retirement security.
K Veeriah is secretary of the Penang division of the Malaysian Trades Union Congress
AGENDA RAKYAT - Lima perkara utama
- Tegakkan maruah serta kualiti kehidupan rakyat
- Galakkan pembangunan saksama, lestari serta tangani krisis alam sekitar
- Raikan kerencaman dan keterangkuman
- Selamatkan demokrasi dan angkatkan keluhuran undang-undang
- Lawan rasuah dan kronisme
