Call to re­vamp pub­lic sec­tor pen­sion scheme

The Sun (Malaysia) - - MEDIA & MARKETING -

KUALA LUMPUR: So­cio-Eco­nomic Re­search Cen­tre (SERC) ex­ec­u­tive di­rec­tor Lee Heng Guie has urged the gov­ern­ment to re­vamp the pub­lic sec­tor pen­sion scheme as part of its ef­forts to cut op­er­at­ing ex­pen­di­ture.

The scheme is ex­pected to cost RM19.5 bil­lion for pen­sions and re­tire­ment charges in 2016 or 9.1% of the coun­try’s op­er­at­ing ex­pen­di­ture.

Ac­cord­ing to Lee, pen­sions or re­tire­ment charges have been grow­ing at a rapid rate of 10% a year over the 2007-2016 pe­riod. The rate of in­crease even ac­cel­er­ated from 2011 to 2015, which saw pen­sions and gra­tu­ities grow by 10.4% a year to RM18.8 bil­lion in 2015 from RM13.6 bil­lion in 2011.

“I pro­pose that this (re­vamp) ap­plies to new gov­ern­ment ser­vants only. It is time for us to re­form it into a more sus­tain­able and vi­able self-funded pen­sion scheme, but given the big size of the pub­lic sec­tor, it needs strong po­lit­i­cal will to do it,” he said.

Un­der the pro­posed re­vamp, gov­ern­ment ser­vants will be re­quired to con­trib­ute to their fu­ture re­tire­ment scheme, very much like the Em­ploy­ees Prov­i­dent Fund scheme.

Cur­rently, both the gov­ern­ment and em­ploy­ers of civil ser­vants con­trib­ute to a de­fined ben­e­fit scheme, which funds the promised 50% last-drawn salary for life for ex-civil ser­vants and, in the event of death, their spouses.

In an in­ter­view with Sun­Biz, Re­tire­ment Fund Inc CEO Datuk Wan Ka­maruza­man Wan Ah­mad had ac­knowl­edged the need to relook the de­fined ben­e­fit scheme, a fact which was also ac­knowl­edged by Prime Min­is­ter Datuk Seri Na­jib Ab­dul Razak dur­ing one of the bud­get con­sul­ta­tion ses­sions. - Lee Weng Khuen

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