The Malaysian government is refining plans for a new civil service pension scheme and may announce the details by the end of the year, according to Amir Hamzah Azizan, the second finance minister.
He noted that the government had announced early in 2024 that new civil servants, including those hired on contract, will contribute to the Employees Provident Fund, which manages the retirement savings of private sector employees and the self-employed.
“The plan is still being refined by the Public Service Department. By the end of the year, we will hopefully have some clarification on that, on what will be done,” Amir Hamzah told reporters after launching a national fraud portal on August 20.
Civil service pension fund Kumpulan Wang Persaraan currently manages pensions of public sector employees.
Amir Hamzah said the new scheme will help government’s finances while giving civil servants another retirement saving option.
Malaysia’s population is ageing fast and the government faces a growing pension bill as more civil servants retire.
According to United Nations projections, Malaysia will become an ageing nation by 2030 when 15% of its population will be at least 60 years old.
Ahmad Zahid Hamidi, Malaysia’s deputy prime minister, said in January that the government has allocated 30.5 billion ringgit (US$6.46 billion) for pensions this year and the figure is expected to balloon to around 120 billion ringgit by 2040 without a new salary scheme.
Government employees with a minimum 25 years of service get at least half of their last drawn salaries as monthly pension, while those with 30 years of service get 60%.