Letter: Benefits of Golden Age Pension (GAP)

By Sharan Raj
Human rights activist, environmentalist and infrastructure policy analyst 

For decades, the issue of old age poverty had been left unaddressed for it to become a chronic national crisis. According to the Employees Provident Fund (EPF), about 13.6 million of its members cannot afford to retire. That figure does not include precarious workers and agri-food producers. The rising old age poverty can be addressed by introducing the Golden Age Pension (GAP). Society needs to weigh the overall benefits of such social advancement policy.


GAP Slows Down Ageing Society

According to the World Bank, Malaysia will become a “super-aged society” as 20% of the population will be above the age of 65 years old by 2056. This megatrend is caused by the rising life expectancy microtrend coupled with the declining birth rate microtrend. Since the year 2013, Malaysia’s fertility rate has fallen below the replacement rate of 2.0 children per woman.

Young adults born after 1983s are saddled with student loans, rising housing prices, soaring inflation, stagnant wages and job insecurity. This was a direct impact of privatisation and liberalisation during Mahathir’s first regime. The polices usually take about one generation (30 years) to impact the national fertility rate.

In Asian culture, children are expected to provide for their financially insecure senior citizens, increasing the financial stress. Hence, youths are getting married older and bearing less children to avoid deeper financial stress. The trend of childless couples is rising exponentially not purely because of choice but because of cost. GAP will ease the financial stress on young adults to allow fertility rates to rise again.


GAP Speeds Up Modernisation

Senior citizens with certain obsolete means of production may reject new technology. One such example is taxi drivers assaulting and hindering e-hailing drivers. Meanwhile, senior citizens who own small businesses may reject strategic infrastructure such as the widening of roads, realignment of railways, urban redevelopment etc. These senior citizens reject and agitate against progress to protect their sole “bread and butter”.

Small business and taxi drivers earn too little to save or invest for old age, so they work to death. The loss of existing means of production will make their life more miserable. Hence, the senior citizens oppose modernisation which does not benefit them because it is “do or die”. By providing financial security for all senior citizens, GAP will allow them to accept progress and speed up the modernisation of Malaysia.


GAP Reduces Food Prices

Senior citizens with smallholder agriculture lands and sea-fishing licenses are surviving by renting out their lands and boats respectively to young people and undocumented migrants. The senior citizens will neither surrender nor allow new sea-fishing boats or farming land to protect their meagre rental income. The “rent-to-live” system introduces new input costs on agriculture and produces increasing food prices. GAP will dismantle such resistance to allow lands and boats to move into the hands of the next generation without rental cost.


GAP Reduces Inequality

GAP provides income for senior citizens in small towns and rural suburbs. This increases the base disposable income in those towns and rural areas which in turn increases productive spending on essentials such as foods, groceries and home repairs. Subsequently, it creates and sustains small businesses and jobs to narrow the urban-rural inequality.

Rising labour surplus caused by rural to urban migration coupled with an absence of collective bargaining stalls wage growth, thus widening inequality between labour and capital. GAP creates and sustains small businesses and jobs in small towns and rural areas to reduce rural-to-urban migration, putting upward pressure on wages. Therefore, GAP will narrow labour-capital inequality.


GAP Reduces Homelessness & Begging

Contrary to mainstream narratives, old-age homelessness and begging are not rooted in laziness. Since the 1980s, the government has forced industrial workers to accept low wages and poor working conditions to allow Malaysia to “get rich first”. The low salary prevented them from saving for retirement and purchasing a home. Meanwhile, many of the former high-risk industry workers were unable to bear children due to pollution and poor working conditions.

These workers had sacrificed their life to make Malaysia the 40th richest country on Earth. Today, the senior citizens are left to live and/or beg on the streets. GAP will end old-age homelessness and begging for good. 


Moving Forward 

There is a need for different interventions such as the Golden Age Pension (GAP) to close the income gap between the working age and death age. The discussed benefits of GAP on our society are merely the tip of the iceberg. The federal government could introduce the Golden Age Pension which can be funded by capital gain taxes (CGT) on the ultra-rich.

The World Bank highlighted in its Economic Monitor (December 2021) that Malaysia had achieved the material condition to tax capital gains and inheritances as a form of redistributive mechanism. Capital gain taxes (CGT) does not impact 99% of the population compared to regressive Good & Service Tax (GST).


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


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