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.

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