In debating retirement age, solve the retirement savings issue too — Mohammad Abdul Hamid
onSEPTEMBER 7 — Amidst the ongoing debate regarding the retirement age extension, I would like to draw the attention of policymakers, politicians as well as the general public to one of the main issues, which is the retirement saving among EPF members and those without any old-age financial protection.
Based on a recent survey conducted in April 2019, my research shows that two thirds of EPF members in the 51-55 years age bracket do not have sufficient savings of RM240,000 for retirement, despite approaching the age when members can opt for full withdrawal. 38.1 per cent of respondents in this age bracket only have RM60,000 or less in their EPF accounts .
To address this issue, I recommend the use of behavioural insights/nudge , such as a percentage increase in employee’s contribution whenever an employee received a pay raise. This should be set as a convenient default option to improve retirement savings, but employee can still choose to opt-out if he/she so decides.
It is also recommended that instead of using the minimum wage as benchmark for the lower income groups, a push for employers to adopt the concept of living wage should be considered, taking into account the variations of cost of living based on household size, geographic locations etc.
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