One in three Malaysians ‘very worried’ about expenses in retirement
KUALA LUMPUR: One in three Malaysians are very worried about their expenses in old age, with only 40% of the population financially ready for retirement, according to Bank Negara Malaysia (BNM) deputy governor Abdul Rasheed Abdul Ghaffour ( pix).
However, despite the worries, Abdul Rasheed said, Malaysians adopt a passive strategy for their retirement planning, relying mainly on the government or statutory bodies such as Employees Provident Fund (EPF) to fund their retirement needs.
“As mentioned earlier, many of EPF’s contributors have insufficient funds for their retirement. This brings us to another question – what are their fallback plans? Apparently, nothing concrete,” he said in his speech at the launch of financial education and retirement planning module by EPF and Credit Counselling and Debt Management Agency (AKPK) last Friday. Based on the central bank’s survey in 2015, Abdul Rasheed said, the majority of Malaysians have inadequate knowledge on financial matters to enable them to make informed financial decisions, particularly among the vulnerable groups. In addition, he said, a significant majority of Malaysians display shortsighted tendencies and are inclined to “live for the moment” – that is, to focus only on instant gratification at the expense of long-term financial planning. Abdul Rasheed said the survey also observed that more than 75% of Malaysians find it difficult to even raise RM1,000 to meet emergency needs, noting that only a quarter of Malaysians have any form of investment. He added that most Malaysians indicated that they will face financial pressure should there be a loss of income. “This could be a result of lack of financial planning when they were younger. Generally, the younger population between 20 and 35 years old perceive long-term financial planning as applying to a time horizon of only the next 10 to 20 years,” he noted.
Therefore, Abdul Rasheed said, financial education introduced from an early age is essential so that they will be more prepared and empowered to lead a healthier financial lifestyle as they move into adulthood.
Similarly, he said, greater attention should be accorded to long-term financial and retirement planning from young, or when entering the workforce.
“As most of us here represent employers throughout Malaysia, I would urge that financial education and planning aspects should be embedded in our training modules, including the retirement module developed by AKPK and EPF,” he said.
The retirement module, called “Retirement, the Start of a New Journey”, acts as a reference and guideline, particularly for AKPK’s and EPF’s speakers conducting public talks pertaining to issues on personal finance management and retirement planning.