Perak comes up tops as the state with the most number of its residents in the age 65+ category (10.5%), true to its silver reputation. The high numbers are raising concern and turning a few black hairs grey in the state administration. Our demographers call it the ageing population dilemma, but it is a Made-in-Malaysia problem.
This conundrum, as some have termed it, stems from the obsolescence of our economic structure. Imagine living in a house constructed 70 years ago. That is our national economic building — rusted iron and decaying bricks. In contrast, wild animal populations have a vibrant organic structure that copes with ageing as a natural phenomenon. It’s no sweat to the old tigers, elephants, or deer.
But it is not too late to transform Perak into a “silver economy” state. Let’s start by examining why the economic structure is so obsolete and no longer fit for its purpose. This ageing quandary developed because the planners decided that at age 60 you must leave your job to make way for fresh graduates to enter the workforce. The freshies have no work because two million jobs have been given away to foreigners.
You have to be pushed out for the sake of freshies because they can’t do the job of the foreigners—meaning, they have no vocational skills and no interest in maintenance, construction, and hospitality work. This tells you that the educational system is badly orientated, but no one is keen to redesign the schools. The easy way is to sacrifice retirees at the altar of simple expediency; a knife plunge to the pocket.
At age 60 you are still mentally agile and physically young. At 60, you are likely one of the best workers in terms of soft skills and even hard skills if you have polished them over the years. But on your 60th birthday, you are deemed senile by the law and must be led to the altar of sacrifice. Biologically, you get old at age 70 and not earlier.
Retirement is fixed at young 60 because of the strong insistence of employers who obviously prefer freshies because their starting pay is very low. The savings in manpower cost are huge, but the damage to our national economy is even larger.
After retiring the 60-year-olds, the planners moan that these guys don’t have enough money in EPF to survive. A retiree needs to have RM240,000 in EPF to draw out RM1,200 a month as dividend at 6% yield. This is the current minimum wage. Only 3% of Malaysians are capable of hitting this threshold of required savings by age 60.
But some EPF practices are themselves obsolete. Why is it being used like a bank with savings being pulled out for emergency use, for education, and for unit trust investments which impose a sales charge? Workers should have other savings for these purposes. The EPF board needs to review these practices including withdrawal for unit trust purchases, as higher returns come with medium to high risk.
Instead of the I-Sinar and I-Citra withdrawals for pandemic and flood use, the Government should have borrowed from EPF to set up a fund for lending money to the hard-hit victims. Tycoons should donate to such a fund, so that the Government need not borrow heavily from the EPF. The EPF should treat its loan to the Government as an investment with a normal rate of returns to preserve its dividend payments.
These emergency EPF withdrawals have left 73% of contributors without sufficient savings to live above the poverty line upon retirement. Yet retire they must, by law. Almost half of EPF contributors have less than RM10,000 each in their savings.
Many countries have become wiser by adopting better practices such as extending the retirement age beyond 60, providing tax incentives to employers who retain seniors, supplying alternative jobs, encouraging companies to rehire seniors, or scrapping compulsory retirement altogether. Nobody should have to retire before age 70.
Throwing out 60-year-olds creates a vicious cycle of poverty because their adult children have to divert funds to support them, and they do this by reducing expenditure on their own children’s healthcare and education — two crucial factors in poverty eradication. Poverty thus extends down the line to the children and grandchildren.
Some in the Government call it an act of filial piety. Wait, are they interpreting filial piety in financial terms? The tradition of supporting parents with your hard-earned money stemmed from the age of agriculture when farmers produced as many as 10 children per family to serve as farmhands. Parents spent their savings on the children, and in turn the 10 children shared the financial burden of supporting aged parents.
Today with prices of goods and services hitting the clouds, if you have 10 children and you’re not a tycoon, all your kids are destined for a life of poverty. The modern practice of chasing 60-year-olds out of the workplace and making them a burden to their two, three or four adult children is one of the reasons for continuing poverty.
Should you withdraw all your EPF savings upon retirement and invest them in a property so you can rent it out for passive income? Be careful. The outgoings on property ownership can be rather high, and be mindful that if you become a landlord, the law is on the side of the tenant. If he defaults in paying rent, your only recourse is to employ a lawyer and take the matter to court. Can you afford that expenditure?
Fears have been expressed that a later retirement age will create more health risks for senior citizens. This fear runs opposite to scientific studies indicating that continuance of work keeps the brain agile and the body healthy. Nevertheless, the law can be reframed so that 60-year-olds can be reassigned to non-command positions and put on shorter hours with lower pay and no benefits except for EPF.
Nationwide, citizens above 60 account for 10.4% or 3.4 million of the population. There is silver in their hair and it can be mined. Most seniors are willing to be employed on shorter hours and lower pay. With their experience and skills honed over years of work, seniors are gems that no state should throw out of the workforce.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Ipoh Echo