There is an urgent need to establish the Malaysian Social Protection Council to suggest new laws and formulate a comprehensive government policy to address the needs of an aging society, ranging from healthcare, housing, transport to financial planning, according to Employees Provident Fund (EPF) deputy chief executive officer for planning and strategy management Tunku Alizakri Raja Muhammad Alias. Pix by Asyraf Hamzah

KUALA LUMPUR: There is an urgent need to establish the Malaysian Social Protection Council to suggest new laws and formulate a comprehensive government policy to address the needs of an aging society, ranging from healthcare, housing, transport to financial planning, said the Employees Provident Fund (EPF).

An aging society is a situation when people live longer, pay more for healthcare, experience falling birth rates and future generations face an ever increasing number of pension commitments with fewer resources.

The United Nations has forecast that by 2030, Malaysia will be an aged country, with 14 per cent of the population, with 5.2 million people aged 60 and above.

"We need to have a comprehensive approach to incorporate best practices for an aging society," said EPF deputy chief executive officer for planning and strategy management Tunku Alizakri Raja Muhammad Alias.

"We need to ask ourselves how best do we can adjust our education system to prepare the youths of today for longer working lives and practise better financial planning," he said.

Citing data from Retirement Fund Inc or Kumpulan Wang Persaraan (KWAP), Tunku Alizakri noted that the government would need to come up with RM22 billion a year for pension payout; this will increase drastically to RM32.5 billion by 2030.

Governments around the world are struggling to support growing numbers of retired people who depend on a shrinking working population. Malaysia needs to meticulously prepare for increasing pressures on public finances from an ageing population.

"There are 24 ministries which will need to be on board the Malaysian Social Protection Council to look at specific tax incentives and infrastructure to develop elderly-friendly cities and communities," Tunku Alizakri said.

He was speaking to Business Times today at the sidelines of the International Social Security Conference 2016, jointly organised by EPF and US-based financial services provider State Street Corp. The two-day conference carried the theme 'Active Ageing: Live Long and Prosper'.

Among topics discussed include Ensuring Happiness and Quality of Life in Retirement; Demographic and Social Changes: Impact Towards Retirement; The New Definition of Retirement; Your Retirement Aspiration: Making it a Reality; Developing Age-Friendly Cities and Communities in Malaysia and Future of Ageing in Malaysia: The Role of Science and Technology.

On the self-employed, Tunku Alizakri said that as of July, close to 85,000 individuals have participated in the 1Malaysia Retirement Savings Scheme since it was introduced in January 2010.

“We urge the self-employed to participate in this scheme to better prepare for their golden years.”

The scheme is open to all Malaysians below 55-years-old. These include freelance workers, multi-level marketing agents, insurance agents, taxi drivers, petty traders, farmers, hawkers, entertainment artistes, musicians, fishermen and even housewives.

Members of the 1Malaysia Retirement Savings Scheme can contribute as little as RM50 a month. Contribution payments can be made via cash or cheque using KWSP 6A(2) Form at any EPF Payment Counters nationwide.

Since January 2013, the EPF limits all voluntary contributions, including those under the 1Malaysia Retirement Savings Scheme, to RM60,000 a year.

Tunku Alizakri explained that the EPF is meant to provide basic financial security for retirement and not fund management. "Those who are rich enough to put aside more than RM60,000 a year should be able to invest in a fund manager."

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