Survey: Many Malaysians still without any pension savings

PETALING JAYA: Far too many Malaysian are still without any form of pension savings, according to a global survey.

Malaysia has scored a C rating in the ninth edition of the Melbourne Mercer Global Pension Index, ahead of most Asian countries, with its index value up from 55.7 in 2016 to 57.7 in 2017.

The index measures 30 countries and covers 60% of the world’s population, with this year’s edition urging countries with unsustainable pension systems to take action now, rather than risk the need to take even more drastic action in the future.

“Malaysia has a strong pension infrastructure with some good features. However, there are several major risks that should be addressed before we can move up to a B or even an A rating.

“These improvements are vital for the long-term sustainability and efficacy of the system,” said Mercer Malaysia CEO Hash Piperdy, commenting on the country’s score.

He said that the public sector pension system would only get more expensive over time and that there were still far too many Malaysians without access to any form of pension savings.

“There should be a minimum level of support for the poorest individuals; and greater incentives for employers and other industry and community groups to set up Private Retirement Schemes (PRS),” he added.

According to the index, Denmark, in its sixth year running, retained the top position with an overall score of 78.9, ahead of the Netherlands and Australia at 78.8 and 77.1, respectively.

New entrants to the Index, Norway and New Zealand, achieved credible overall index values of 74.7 and 67.4, respectively.

Both countries were noted as having a sound structure, with many good features, but have some areas for improvement.

Mercer’s president of Health and Wealth, Jacques Goulet, said increasing life expectancies and low investment returns were having significant long-term impact on the ability of many systems around the world to deliver adequate retirement benefits.

He added that Japan, Austria, Italy and France were examples of developed economies whose pension systems did not represent a sustainable model that will support current and future generations in their old age.

“This is due to a combination of factors, including a lack of assets set aside for the future, low labour force participation at older ages, and significant demographic changes towards an ageing population,” he said.