Raising Retirement Age

Have you planned on when you want to retire? You might have given this some thought no matter how old or young you are and currently, the official retirement age in Malaysia is 60, which was enforced in 2013, after the Congress of Unions of Employees in Public and Civil Services (Cuepacs) urged the government to raise the retirement age from 55 to 56 in 2001 and to 58 in 2008.

When Cuepacs proposed for the retirement age to be extended to 60, they argued that it was timely to do so in order to catch up with the other countries in the region.

The increase in retirement age was also thought to be a relevant move because Malaysians now enjoy longer life expectancy compared to the past, thanks to the advanced medical healthcare that we have, which results in the older people being strong enough to work long pass 55.

Now, Cuepacs has once again proposed that the retirement age for civil servants be increased, this time to 62, so that the country can prepare itself to become a developed nation on par with other developed countries.

“When heading towards a developed country, we need a policy that is acceptable worldwide.

“Professionals such as lecturers, judges, engineers and consultants have specific expertise, the country will lose out if it lets go of these expertise,” Cuepacs president, Datuk Azih Muda, said in an interview onBernamaTV’s ‘Ruang Bicara’ programme, which aired in July this year.

He also said that civil servants would not be coerced to retire at 62 under the new policy, as they could choose to retire earlier.However, Chief Secretary to the Government Tan Sri Dr Ali Hamsa said that the government had no plans to increase the retirement age in the near future and that Cuepacs’ proposal was premature.

“We have taken note of the proposal, but it would be premature to talk about extending the retirement age.

“So, we will let the retirement age of 60 be in effect for a few more years,” he said in an interview withBernama.

With the new retirement age proposal from Cuepacs still looming, Malaysian Digest sought the opinions of some experts if it would be ideal for the older generation to retire at the ripe age of 60, or beyond that.

Many Issues Will Arise If The Retirement Age Is Extended

Although Malaysia has increased the retirement age several times, Malaysian Employers Federation (MEF) president, Datuk Shamsuddin Bardan, told Malaysian Digest that the environment does not permit the hiring of older people as it would lead to different issues arising in management, apart from becoming a burden for the employers and older employees.

Datuk Shamsuddin highlighted two main concerns, their Employees Provident Fund (EPF) withdrawals and the difficulty in securing insurance coverage for employee hospitalisation.

“EPF withdrawal age used to be at 55 years because of the then retirement age but when the government decided to increase the retirement age to 60, the withdrawal age is still retained at 55.

“So we have a lot of employees complaining that by the time they reach 60, their savings in EPF is very low as they can withdraw money on a regular basis once they reach 55.

“And it is difficult for employers to get any insurance coverage for hospitalisation for employees because the insurance companies will impose additional premiums,” he elaborated.

Datuk Shamsuddin however welcomed the suggestion to offer at least five per cent of the experienced professionals an extended retirement to utilise their expertise, in line with Cuepacs’ proposal.

“Most companies and employers don’t mind offering them employment beyond 60. That would be a practical move and if we just let those professionals go, we would lose their expertise and their foresight over certain issues.

“So I would say yes, increased retirement should be given on a selective basis but not on a bulk basis, where everybody will retire at 62 without having their performance monitored,” he said.

Increased retirement on a bulk basis would only block the younger generation from securing a job and contribute to youth unemployment, which is already high at the present time.

He further illustrated the situation based on what happened in 2013 when the retirement age was increased to 60.

“For the last three years, there was basically zero retirement in the private sector because those who were eligible to retire then will only retire somewhere in July 2018.

“200,000 employees retire on a yearly basis in the private sector but once the retirement age was increased to 60, these 200,000 opportunities were no longer there, so they were actually shutting the doors for new graduates.

“And if we talk about current unemployment, the bulk of the unemployed are youths with degrees and diplomas,” he lamented.

Datuk Shamsuddin thinks that this is a huge concern, and even more so when the lost opportunities in the public service are taken into consideration, where Cuepacs’ estimate of civil servants retiring every year is between 21,000 to 25,000.

Malaysia Will Possibly Lose More Workers In Future

While Cuepacs wants to retain the older generation in the work force for their expertise, some countries have a high retirement age to cope with their ageing population.

Malaysia is projected to become an ageing nation by 2035, where more than 15 per cent of its population will be 60 years and older.

And while Malaysia still has time to prepare for when it happens, Japan has crossed that threshold many years ago, as they now have the oldest population in the world, with more than 26 per cent of the population being over 65 years of age, a result of longer life expectancy and falling birth rate.

To cope with its ageing population, the country currently has an official retirement age of 62 and is set to increase it to 65 by 2025. In fact, several private companies like Honda have already increased the retirement age to 65 starting from April this year.

The very strong market pressure for employers to keep older people has in turn resulted in the younger generation losing their motivation and becoming disenchanted with their jobs.

Coco, is a Japanese expatriate currently working in a multinational company in Kuala Lumpur and moved here over ten years now since her job offer. She discusses with Malaysian Digest how the extended retirement age has affected many youths in her homeland, leaving many unable to progress in the work force.

“If the retirement age is extended to 65, older people can still earn and save money but the younger generation wouldn’t get a chance to discover their full potential at work.

“Although the employment rate for the younger generation is not that bad in Japan, they would quickly move between jobs because this reason demotivates them to stay in companies longer.

“The younger generation want to get promoted to a higher position and be able to do a lot more to progress in their jobs, but due to the older generation staying around in a company longer and taking up all the top positions, they do not stand any chance to progress,” she painted the picture for us.

“On the other hand, if the retirement age remains, younger people will be given more opportunities in their workplace, but the government must support the older people by paying their pensions…which also leaves the younger people feeling unassured about their pensions when they grow older.

“That’s what my friends and I are deeply concerned about. What we all want is for the Japanese government to support our pensions and ensure we will receive our pensions if we were to go back home and work, regardless the retirement age,” she expressed.

Coco’s input was in sync with the observation of Manabu Shimasawa, a professor of social policy at Akita University, who pointed out to New York Times, “Japan has lost its vitality because the older generations don’t step aside, allowing the young generations a chance to take new challenges and grow.”

Having said this, though it may take a while before Malaysia walks the same path as Japan, these observations are definitely something we could ponder on and take heed from.

Old People Should Enjoy Leisure Time

On the other hand, while some older people have not given up work and enjoy spending time working, ultimately, it is important to be subject no longer to the day-to-day pressure of work, finally have time to relax, and enjoy leisure time beyond the age of 60.

Prof Datuk Dr Amir Hussin Baharuddin, an economic expert, told us why he thinks that 60 is an ideal age to retire.

“From my experience, you start to decelerate; you want to work but you have no energy. You start dragging at the age of 60, except for some special guys.

“60 is just nice. Our health might not permit us to keep working beyond that as most people start to have health problems once they hit that age,” he opined.

However, he cautioned that in order to be able to enjoy the life of leisure after retirement, future retirees need to prepare themselves mentally and economically, something that not a lot of retirees were able to do.

“The retirement age used to be 55, and when it was increased to 60, we thought that it was the best age because we would have time to prepare ourselves.

“But somehow, people are still not prepared for retirement, and if the nation cannot prepare them mentally and economically, they would still not be prepared even at 62,” Prof Amir warned.

He goes on to say that while employment needs to be generated for all, priority should be given to the young people of Malaysia, as the older generation have given their services for more than half their lives and it is time for them to enjoy their lives, which is very valuable at old age.

“Let the old people live their lives, and let the young people make money,” Prof Amir aptly concluded the interview.