Malaysia is in the midst of a pension crisis, according to Geoffrey Williams, founder and director of Williams Business Consultancy.
The nation has gone past the crunch point and is “already in the middle of a pension crisis” and the best solution is to set up a universal basic pension scheme for all Malaysians, Williams said during a panel session at a roundtable organised by Asia Asset Management.
“Under the current circumstances, it is the only feasible solution,” he said at the session held on June 17.
According to Williams, proposals such as raising the retirement age and increasing pension contribution are unfeasible because the average retirement savings in Malaysia is already very low.
“It cannot work here because Malaysians have literally nothing. It doesn’t work,” he said.
The Employees Provident Fund, Malaysia’s largest pension fund, has 8.88 million active members, representing only 51.3% of the country’s 17.31 million work force. The fund’s data shows that most retirees deplete their savings within three years of withdrawing their money.
Fellow panellist Joseph Cherian likes the idea of universal basic pension scheme, but said it should only be targeted at the underprivileged and underserved segments.
“We need to take care of those who are left behind,” said Cherian, chief executive officer, president and dean, and distinguished professor at the Asia School of Business.
He pointed out that the government has initiatives such as reverse mortgages to help people to retire better.
Linnet Lee, the third panellist at the session, said reverse mortgages are a good solution, but that the framework may need to be improved.
Lee, chief executive officer of Malaysian financial consultancy firm Resolute Planning, cited the example of a client with a leasehold property who was told they had to renew the lease before applying for a reverse mortgage. She said the client had to give up the reverse mortgage option because of the high cost of renewing the lease.
