They define social pensions as transfers to the elderly that are financed by general government revenues – meaning they do not require a contribution from the recipient and are typically offered to eligible citizens, often defined by age or income.
Malaysia is an ageing society, based on the United Nations’ definition of one where at least 7 per cent of the population are aged 65 and above.
It is considered an aged society if this ratio exceeds 14 per cent and “super aged” – when the share reaches 21 per cent – by 2056.
At the launch of the report on Thursday, World Bank country manager Judith Green said that Malaysia’s population is projected to transition to an aged society by the mid-2040s, and then to a super-aged nation by the mid-2050s.
“This transition from an ageing society to a super-aged nation will take place at a pace similar to that observed in other Asian countries, such as China and Japan, but much faster than in other developed countries,” she was quoted as saying by news agency Bernama.
She added that on average, the accumulations of Employees Provident Fund (EPF) – which is Malaysia’s retirement fund – numbers are low and typically run down within three- to five years of withdrawal.
Therefore, Green noted that social pensions are the last line of defence and safety net, and that she indeed sees a growing number of countries introducing or expanding their social pensions, given similar challenges.
“Global evidence has shown that social pensions have a positive impact on reducing poverty. Malaysia is not only facing demographic transition challenges, but there are valuable lessons that can be learnt from global experiences in redesigning and expanding social pensions,” she said.
The World Bank report noted that while EPF contributions have improved in volume and scope, overall retirement savings adequacy remains a critical problem.
In 2023, the fund warned nearly 50 per cent of contributors reaching age 55 had less than RM10,000 in their savings, far below the modestly estimated RM250,000 needed to retire.
https://www.channelnewsasia.com/asia/malaysia-social-pension-elderly-retirees-safety-net-world-bank-5435126
