Image credit: The Star
KUALA LUMPUR: EPF CEO Amir Hamzah Azizan has called for a more inclusive social protection system, describing the current one as “narrow and inadequate”.
Amir said, in Malaysia, only 9.1% of intended beneficiaries are covered, compared with an average of 55.1% in Asia and 12.8% globally.
He said the old-age dependency ratio is also increasing. In 2020, every 10 working-age adults supported one older person, whereas by 2050, three working-age adults will support one older person.
“In light of Malaysia’s elderly population growing faster than other age groups, there is a need for immediate change,” he said during his opening speech at the International Social Wellbeing Conference 2023 (ISWC 2023) today.
The ISWC 2023 is a two-day event jointly organised by the EPF, the finance ministry, the implementation coordination unit (ICU) under the Prime Minister’s Department, and the International Social Security Association (ISSA).
The conference aims to address critical gaps in social security coverage and advocate for the fundamental rights to social protection.
Amir also said the issue of savings adequacy also affects EPF members’ retirement well-being.
EPF uses a benchmark of RM240,000 to determine the achievement of basic savings by age. This amount serves as the minimum target upon reaching the age of 55 and provides RM1,000 per month over a 20-year retirement period.
As of May, Amir said only 30% of EPF’s active contributors met the basic savings target by age, while only 18% of total members met the same threshold.
“The inadequacy of retirement savings is indeed worrying, as it reveals underlying contributing factors such as a low wage structure, misalignment between full withdrawal age and retirement age, inconsistent contributions, under-employment, and a low rate of financial literacy,” he said.
“With a vast network of 15.8 million members, EPF strives to implement long-term strategies to create a positive impact and foster well-being,” he added.
Amir added that EPF is currently focused on expanding coverage and improving retirement savings adequacy for its members.
It is also deploying mobile units to reach out to seven million people in informal sectors as well as those who are self-employed, who could become EPF members.
Furthermore, EPF is exploring various approaches, including a basic income drawdown option to enhance its decumulation offerings and provide members with an additional source of retirement income.
“Another area actively being studied by EPF is the establishment of Pillar 1 of the International Labour Organization’s Multi-Layer Income Framework through the introduction of a contributory national pension,” he said.
Source: https://www.freemalaysiatoday.com/category/nation/2023/07/05/malaysia-needs-a-more-inclusive-social-protection-system-says-epf/