Business

Thursday November 19, 2009

Retirement age should be pushed higher

By Jagdev Singh Sidhu


There is a saying in sports – if you are good enough, you are old enough.

With a slight twist, that can also be applied to a person’s working life.

One such example is my uncle, a microbiologist, who, after spending a career in Singapore, migrated to Perth, Australia under a decade ago.

Feeling he still had a lot to offer, he approached a university there and started tutoring on a part-time basis.

Later, the university, after reading his resume, decided to offer him a permanent job with greater responsibilities.

He recently celebrated his 70th birthday.

There are countless other real life examples where older people remain productive and a big contributor to society but such a story would probably not get told very often if my uncle was living here.

The reason for me saying that is the relatively early retirement age in Malaysia of 55 for the private sector and 58 under the civil service.

Sure, there is always the option of a contract but in today’s world, there are a number of good reasons why the retirement age for Malaysians should be legislated and lengthened to fall in line with the global trend and also the new high income economic model the Government is planning to unveil next year.

There has to be a greater appreciation of the talent and skills people over the age of 55 can offer, and with life expectancy rising over the decades with better medicine and health awareness, it is unrealistic to consider Malaysians over that age to be past their prime.

Life expectancy of Malaysians today is 73.29 years of age, which, according to the CIA World Factbook, is the third highest in Southeast Asia after Singapore (81.98) and Brunei (75.74).

Malaysians tend to live longer than their counterparts in Thailand and Indonesia, but ironically have a lower retirement age than those two countries which have theirs set at 60.

To live nearly 20 years on retirement savings is a tall order and it’s no wonder we hear the sad stories of numerous Malaysians who run out of savings shortly after retiring at 55, contributing to an equally troublesome social problem as the tens of thousands of youngsters out there who cannot find employment.

What should policy makers do?

Making a decision on lengthening the official retirement age would be difficult given that Malaysia’s birthrate is still among the highest in the world and thus the make-up of the population is much younger than most countries.

It is, however, the right thing to do.

That birthrate is tapering and there is no doubt that in a matter of time, Malaysia too will face the problem of a greying population.

But the argument that old people are not productive is also a fallacy.

There is no detriment to competitiveness of a country – which is a key measure – as there is a number of countries that are better than Malaysia in that regard despite having higher incomes, an older population and invariably higher retirement ages.

In fact a lot of countries that lead the per capita GDP ranking have an older population profile and retirement age than Malaysia.

The other benefit of lengthening the retirement age is its impact on domestic demand.

Consumption tends to taper off the closer a person reaches his retirement age but it is during such a time that governments should want their people to consume more as the conventional wisdom is that they are at their peak earnings potential during such a time.

If people had the luxury of knowing that their retirement is, say, put off by another five or 10 years, they would be able to make purchases of big ticket items, and other consumables, without much restraint.

The gain on the domestic economy would be tremendous.

And if Malaysians think people over the age of 55 are over the hill, I wonder what all our prime ministers, past and present, would say to that.

l Jagdev Singh Sidhu is a deputy news editor at The Star. He thinks he is much younger than he looks.

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