Malaysia prepares private sectors workers for retirement
He said the social safety net for private sector workers could be done by “switching” the existing contribution scheme to a pension-like scheme.
He explained that workers in the private sector do not have access to social security after retirement, unlike public sector workers, who are protected by the government’s pension scheme. Employee Provident Funds (EPF) contributions, which can be withdrawn at 55 and 60, are the only social security net they have after retirement.
Furthermore, workers in the private sector contribute to the Social Security Organisation (Socso) until they reach the age of 60, by which time they may not be entitled to any claims to manage chronic diseases, said the minister.
He added, “As such, I am looking at the possibility to increase the contributions for Socso and after they turn 60, it becomes a pension-like scheme. It has to be done and it is not an option. This is as we are heading towards an ageing nation by 2040.”
One of the challenges of transforming the existing contribution scheme into a pension-like scheme, Saravana added, is that more monthly contributions will be needed, reported the New Straits Times.