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ios developer account(buyappleacc.com):Old-age poverty \u2013 time for social pension reform

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BASED on current estimates of retirement savings, the majority of Malaysians will live in abject, absolute poverty during the final years of their lives.

To see this, we need to note that Malaysia’s working-age population is around 23.3 million people with 16 million in the workforce and 7.3 million outside of the workforce.

Unemployment and underemployment account for 771,800 and 2.4 million people respectively.

Around 15.3 million people are actively working, with 3.8 million in the informal sector and 11.6 million in the formal sector.

Within this group, 4.1 million have no formal pension cover, leaving only 5.8 million active Employees Provident Fund (EPF) contributors and 1.7 other formal pension contributors mainly in the civil service.

Among the EPF contributors, we now know that around 46% or 2.7 million people have less than RM10,000 in pension savings.

Taking this together, 48.9% of the working-age population have no cover for retirement and 63.8% have basically no cover for retirement.

In fact, this scenario for the whole population is mirrored in a recent analysis by EPF, which suggests that only 3% of Malaysians will reach their estimated threshold for required savings of RM240,000 by retirement, according to EPF chief strategy officer Nurhisham Hussein.

In order to understand how devastating this is, let’s do some simple mathematics. If a person retires with RM10,000 in their EPF account and lives 20 years, the person would have RM500 per year or RM42 per month or RM1.37 per day to live on.

Recent EPF data showed a 60% decline in median savings among the 5.05 million EPF members in the B40 group from RM2,434 (RM10 per month for 20 years) to RM1,005 (RM4 per month for 20 years) post-Covid-19.

For those in the M40 category, there was a 17% drop in median savings from RM30,113 (RM125 per month for 20 years) to RM24,995 (RM104 per month for 20 years).

We know the withdrawal schemes under i-Lestari, i-Sinar and i-Citra, which have left 6.3 million Account 1 holders and nine million Account 2 holders with less than RM10,000 balance, but this is only part of the problem.

The extent of pension inadequacy is a structural problem, not related to EPF alone, but related to wider issues of low-pay, poor savings, low workforce participation and too few savings options.

For now, rehearsing these causes and looking for someone to blame serves little purpose, instead we must look for solutions because pension reform is essential and must begin immediately.

The best schemes target a good standard of living as we get older rather than providing a replacement for income when we stop working at a fixed artificial age.

This would include a means-tested guaranteed universal basic income (UBI) or living wage (LW) jointly funded by the state and contributions as now from employees and employers but with social top-ups for those unable to make the target monthly savings.

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