THE NEED TO KEEP RAISING THE RETIREMENT AGE

PM Tun Mahathir, 93, has jokingly said the new retirement age in Malaysia will be 95 in 2020 when he hands over his premiership to Datuk Seri Anwar Ibrahim. He may have said it in jest but at the rate our demographics are changing, Malaysia will reach ageing nation status by 2030, and we will see more people working well into their 70s.

When the Employees Provident Fund (EPF) was established in 1951, life expectancy then, believe it or not, was 55! With the retirement age set at 55, lump sum EPF withdrawals would be more than sufficient to sustain contributors through the short retirement period. We now know those figures were way off the mark. Advances in science, medicine and technology have drastically extended life span. Life expectancy in Malaysia currently stands at 75, and is set to rise further in the years ahead. 60 is the new 40, and living to a ripe old age of 80 and beyond is fast becoming the norm.

This begs the question - do we have enough in our EPF savings to see us through an additional 15 to 20 years? For the majority the answer is No. The M40 (middle income group) is arguably the worst off as they are not eligible for welfare aid unlike the B40 (lower income group). They also have more financial commitments such as these below:

• loans to service (housing loan, car loan)
• their children's higher education 
• their healthcare expenses
• support for their elderly parents

Do check out what these senior citizens from M40 have to say about their financial status, and what we can learn from them at this link. Their profiles are typical of most retirees.

Upon reaching 55, most retirees would opt for lump sum withdrawals. They have worked hard and waited patiently for the day when they would have the means to turn their dreams and plans into reality, whether it is to pay off debts, renovate the house, take a well-deserved holiday abroad or start a business. Unfortunately, going by EPF data, most end up depleting their retirement savings within a few years mainly through mismanagement of their money.

How much should the average retiree have in order to avoid getting into debt? EPF puts it at RM228,000. More than half of their members have way less than this amount (see infographic below). EPF has come up with some good advice on how to live a simple and sensible life in retirement to stretch savings. If a retiree finds himself unable to cope financially, he should pay a visit to AKPK (Agensi Kaunseling dan Pengurusan Kredit) for some free advice on how to manage his limited financial resources. Or refer to AKPK's special presentation for SeniorsAloud members at this link.

Read the full article at this link.

To reduce the risk of retired contributors using up all their EPF savings within a few years, EPF introduced several withdrawal packages (see below). There is also the option of leaving the entire sum with EPF until age 100 and still enjoy dividends. At dividend rates of 6% and above since 2011, it makes sense for retirees to let their savings remain for as long as possible with EPF. The dividend for 2017 was 6.9%.

Read the full article at this link.

Many of my friends who were teaching in public schools back in the 1980s opted for early retirement when they reached their 40s. As long as they had served a minimum of 10 years, they were eligible for a gratuity and pension benefits as stipulated under Section 12A Act 227/239. Today early retirement at 40+ would be unthinkable for most people. Given the rising cost of living and a host of financial commitments, few can afford to enjoy full retirement. The mantra is work, work, work for as long as possible.

Acknowledging the plight of retirees and those nearing retirement age, the Pakatan Harapan government has sought to increase job opportunities by proposing tax incentives for employers hiring older Malaysians. It's a long shot from proposal to implementation. Whether this will make a significant difference remains to be seen.

Source: Budget 2019

One thing is for certain - we can expect the retirement age to continue going up. In developed countries such as Germany and Japan, the retirement age is moving towards 70. Former PM of Singapore, Lee Kuan Yew, famously said that 'retirement means death', and was in favour of doing away with the retirement age.

As the country's biggest employer, the government finds it a challenge to fund pension payouts to a growing pool of retired civil servants and beneficiaries that is expected to reach 836,000 in 2019 and would cost KWAP (Kumpulan Wang Persaraan) a whopping RM26.56 billion. This is one of the main reasons for raising the retirement age - to enable both retirees and pensioners to work longer and accumulate sufficient savings to be self-supporting in old age.

Read the full article at this link.

Older Malaysians too want to work for as long as they are able. The family structure has changed so drastically that parents can no longer expect their adult children to support them in their old age. Family size has shrunk, and with the grown children moving out to work or settle elsewhere, retired couples are often left to fend for themselves.

The falling fertility rate at 1.9 is the lowest on record and below the replacement rate of 2.1. This means a shrinking of the young work force. This shortage of young workers will have to be met by an increase in technology, in the recruitment of foreign workers and in opening jobs to people in the 60 to 65 age group.

So, whichever way we look at the situation, there is definitely a need for older workers to return to the work force, and for the retirement age to be raised. The likelihood of doing away with a retirement age will gain traction in the years ahead. Let's just hope it won't reach a situation where we have to work till we drop dead!

OLDER WORKERS CAN MAKE A DIFFERENCE

Who can afford to retire these days? With the high cost of living, the slowdown in the economy and the depreciation of the ringgit, our retirement savings will be depleted long before we are gone. It's time for a Plan B, C or D to supplement our retirement funds. It's either back to work, start a small business or invest a portion of our savings.

If you have no head for business or investment, the best option, arguably, is to get a job. However this is easier said than done. Jobs that are suitable for older workers are limited. But a bigger challenge facing retirees planning to return to full or part time employment is age discrimination. With multinational corporations, SMEs and retail businesses laying off staff in the hundreds and thousands, retirees have better luck striking a 4-D lottery than getting re-employed.

Freddie Yap

That is why Mayflower Tours deserves two thumbs up for giving two of its employees, Ivan Ho Eng Kiang, 67, and Mohd Shapiei bin Zakaria, 68, the opportunity to continue working with the company. Both had already reached retirement age.

Says Freddie Yap, Head of Coach Operations with Mayflower, "The Gardens Mall had approached us to provide a shuttle service from Mont Kiara to The Gardens Mall, including a conductor and a driver. We immediately thought of Ivan and Shapiei. Both men had just the right qualifications and qualities for the job.

Ivan, a former tour guide, knew exactly what the job entailed. As for Shapiei, his vast experience as a former driver with a tour and travel company made him an obvious shoo-in for the job."

Billy Pih

Fortunately for Ivan and Shapiei, The Gardens Mall had no issue with having two senior citizens running the shuttle bus service.

"To us, what matters most is excellent customer service and good work ethics," explains Billy Pih, The Gardens Mall Customer Service Manager. "As the passengers are mostly expats and locals residing in Mont Kiara, we needed someone who could speak good English, is familar with the needs and expectations of the passengers, and upholds professionalism in his work. Ivan fits the bill. The same with Shapiei. It would be hard to find a more reliable, responsible and patient driver than Shapiei. He is very careful on the road. The safety of the passengers is paramount to him.

What do both Ivan and Shapiei have to say about their work?

Ivan Ho

Both men take their job responsibilities seriously. "I enjoy my work. I would be bored stiff doing nothing, just sitting around at home," says Shapiei.

"Me too," chips in Ivan. "My children have no objections to my returning to work. In fact, they say it's good for me. Keeps me physically and mentally active. And self-supporting too."

As part of his daily work routine, Ivan welcomes the passengers on board, reminds them of the schedule for the day and even throws in suggestions on what activities they can enjoy while at The Gardens Mall and MidValley City. No other shuttle service provides a conductor quite like Ivan.

Shapiei, on the other hand, prefers to focus on his driving. Soft-spoken and mild-mannered, he is a direct contrast to Ivan, but together they make a great team.

Now eight years down the road, Shapiei still enjoys driving the shuttle, and Ivan still relishes taking good care of everyone on the shuttle. He finds seats for the elderly, helps young mothers with their strollers, and others with their shopping bags. Mont Kiara residents who use the service have nothing but high praise for both men.

Mohd Shapiei Zakaria

Retired school administrator, Chan Ng Moi, has been taking the shuttle for the past three years. "The service is excellent. The bus is clean and comfortable. Ivan is friendly and courteous. He connects well with the passengers. As for Encik Shapiei, I feel safe knowing he is behind the wheel. He is such a cautious driver. I have never seen him speed or lose his temper. This is very important as there are elderly people and children taking the shuttle daily."

Indonesian expat, Lovi, echoes the same sentiment. She uses the service regularly with her husband. "It's so convenient. This morning we took the 10.00am shuttle, did our grocery shopping at the supermarket in The Gardens Mall, and returned to Mont Kiara on the 11.35am shuttle. We are able to plan our shopping trips according to the schedule because we know the shuttle is always on time."

When pressed about the company's hiring policy, Pih has this to say: " We don't discriminate on age. As long as the candidate possesses the right work experience, is in good health and willing to work hard, we will recruit him. The right person for the job must also be well-groomed."

Adds Yap, "Having the right attitude is equally important. Older workers must be willing to learn, adapt to change and accept instructions from younger management staff."

Orderly queuing to board the shuttle at The Gardens Mall. 

To sum up,  here's the take-home message from my interview with the four gentlemen. Seniors who are contemplating rejoining the work force should take note of these tips. They will stand you in good stead the next time you apply for a job.

• be flexible
• learn to keep up with technology
• upgrade your skills
• stay relevant to the changing times
• respect your bosses regardless of their age
• uphold work ethics
• don't make unreasonable demands
• be a team member

Footnote:
Other shopping malls in the Klang Valley also provide shuttle bus services. But The Gardens Mall shuttle service stands out in terms of safety, reliability and customer satisfaction. It deserves a 5-star rating. I should know as I use the service regularly.

For those new to the service, here's some info regarding The Gardens Mall shuttle service.  It is complimentary. The route covers Mont Kiara, The Gardens Mall at MidValley City and KLSentral, with three trips a day, 365 days a year. Pick-up and drop-off point is next to Jeeves Dry-Cleaners in the Isetan wing of The Gardens Mall.

(Article by Lily Fu)

TO WORK TILL 60 OR RETIRE EARLY? YOU DECIDE

Still active and able to carry on working at 60+.
(Front page article of New Straits Times Dec 8, 2012)

So it's confirmed. The Minimum Retirement Age 2012 Act comes into effect on July 1, 2013. Under this Act which was passed in August last year, it is mandatory for employers in the private sector to retain their staff till they reach the new retirement age of 60. This move will affect close to 11 million workers.

Good news or bad news?

That depends on who you pose this question to. Employers in the private sector aren't exactly celebrating the news. Retaining older workers for another five years means higher pay-outs compared to hiring new and younger workers at a lower starting pay. Even among workers, not everyone is jumping for joy. Some have already made plans to retire at 55 and pursue other interests. Others can't wait to clock out for the last time and enjoy their golden years.

Dwindling value: RM1m won’t be sufficient
to retire for long.

Frankly, except for the few who have wisely planned ahead for a financially secure retirement, most people have little choice but to carry on working for as long as they are physically and mentally able to do so. Their EPF savings and pensions are simply not enough to see them through the next 20+ years given the average life expectancy of 75. Financial experts say that we would need to have at least RM1 million in retirement savings to enjoy the level of lifestyle we were accustomed to before retirement. How many of us have that much money saved up?

As it is, we are already complaining about escalating prices and soaring expenses. With inflation eating into our nest egg, we just have to keep on bringing home the bacon, especially if we have college-going children and elderly parents to support.

The impact of inflation (Source: The Star)

The younger generation of workers lament the loss of job opportunities and promotions when older workers stay on longer in their jobs. My response to them:

• Be glad that your parents are self-supporting. It means you get to spend more of your salary on yourself.
• Be glad that your parents have a job to keep them physically and mentally active. Would you rather have them bored and depressed at home?
• Not all younger workers have the wealth of experience that older workers have. How can they even think of replacing these older workers?
• Older workers can stay on to mentor younger, less experienced workers.
• The birth rate is declining while life expectancy is increasing. There will be fewer young people supporting the elderly. So the longer older workers remain employed, the lesser the pressure on the young to support them. 

Former Singapore PM Lee Kuan Yew, 86, advocates removing the retirement age. "You work as long as you can work and you will be healthier and happier for it. If you ask me to stop working all of a sudden, I think I'll just shrivel up, face the wall and just that."..."Many of our workers have a preferred retirement, and then they die early! It won't be long before the message sinks home that if you keep doing what you're doing for almost the whole of your life, the chances are you will stay interested and engaged in life, there's something to do tomorrow and you keep going. If you start saying,'oh! I'm old!' And you start reading novels and playing golf or playing chess, well, you're on the way down." (Source: Channelnewsasia)

Ultimately, it's the individual worker's choice

Well, I am for options. Employers should offer older workers the option of early retirement at 55, or continue working till 60. I recall in the 1990s (or was it 1980s?) teachers were given an option to retire at 45 (for women) and 50 (for men). 

Not all retirees want to work till they drop dead. They may want to opt out and have more time for the family, and more time to smell the roses. We should let the individual worker decide. It's his life after all.

AN EXTRA FIVE YEARS TO GROW OUR GOLDEN NEST EGG

Front page of the Malay Mail today (14 June 2012)

A bit too late for me, but good news for those about to reach the current retirement age of 55 for the private sector. An extra five years can mean additional money for our golden nest. With the ever spiraling cost of living eating into our limited retirement savings, every ringgit counts.

Our generation of baby boomers (those born between 1946-1964) are enjoying longer life expectancy, with 76 years the average for Malaysians. It is ridiculous to retire employees when they reach 55. How are they going to support themselves for the next 20 years or more? How many of us would have at least RM1 million in our EPF at age 55? That's the minimum we would need to continue maintaining our current lifestyle after retirement. Those who withdraw all their EPF savings in one lump sum will use it all up within three years. These are statistics released by EPF based on surveys they have conducted.

From a slide presentation given in June 2010 by EPF's general manager. The figures have probably gone up since then given the escalating cost of living.

Older workers, both professionals and blue collar employees face age discrimination. If you are retrenched or retired, the odds are against you when it comes to re-employment. That is why many use their retirement savings to start their own business and become self-employed.

However, not everyone is in favour of raising the retirement age. There are older folks who can't wait to withdraw all their EPF money for whatever personal reasons. After all, it is their hard-earned money and they have a right to do whatever they want with it. They don't want to wait another five years to be able to do so.

There are also the younger work force who argue that retaining older staff means depriving them of career advancement opportunities. Think of it this way. Wouldn't they want their parents to be financially independent for as long as possible?

We can look at the issue from all angles, but in the end, the pros of raising the retirement age far outweigh the cons. This issue has been covered numerous times on this blog. Here is a sampling - click on the links to read.

Related articles:

A Daily Struggle To Survive
Can We Afford To Retire?
Not Ready To Be Put Out To Pasture
In Praise of Older Workers

COMPANIES THAT VALUE OLDER WORKERS

Congratulations to Lam Soon Edible Oils Sdn Bhd for winning the 2011 AARP international award for Best Employer for Workers Over 50. It is the only Malaysian company to win in this category. Other winners include BMW Group (Germany), Daikin (Japan), and Marks and Spencer (UK). There are two winners from Singapore: Raffles Institution and the National Environment Agency. You can read more about the winners and their winning criteria on the AARP International website.


Whang receiving the award from AARP representatives. (Photo: The Star)

Lam Soon has a total of 1456 employees. Of this, 20.1% are aged 50 and above. Says executive chairman, Whang Shang Ying, "We believe older employees possess great experience and are able to contribute significantly to the company. For example, older employees in each function are designated subject matter experts and play a useful role as facilitators and trainers."

That was in 2008. Is the policy still in place at Secret Recipe?

Three years ago Secret Recipe set aside 50 vacancies in its service line for older workers under its CSR programme. A check of the company's website failed to locate any job opportunities targeted for older workers. Has the policy has been discontinued? If yes, why?

For more on the re-employment of older workers in Singapore, click here.

Footnote: AARP (formerly the American Association of Retired Persons) was founded in 1958. Over the years AARP has extended its reach to other countries. Today through its Office of International Affairs, AARP seeks to help people live longer, healthier, more financially secure and productive lives by identifying and sharing the best ideas and practices on key policy issues. As a social change organization, AARP works towards fulfilling a vision of a society in which everyone ages with dignity and purpose.

WHAT IS AN OLDER WORKER WORTH?

 The Sunday Times editorial 17 July

Going by the editorial in The Sunday Times today, the answer is "Much less after 62". That's the official retirement age in Singapore. Come January 2012 when a new law on re-employment of older workers takes effect, employers will have to rehire older workers till they reach 65, with an option to extend employment till 67.  

While this may be welcome news to many employees who are about to retire, the new terms of re-employment might not be in their favour. Some companies which have started early implementation of the new policy have cut salaries of rehired older workers by as much as 30%, reduced medical benefits, and in some cases, taken away bonuses.

Source: The Straits Times 9 July

It all boils down to 'take it or leave it', with the employer having the upper hand. The older worker is in a weakened position to negotiate for better terms. He has little say in the matter, especially if he needs to carry on working to build a decent retirement nest. The only recourse left is for the respective workers' unions to present their case for a continuation of the current terms at best, or a less drastic pay cut at worse.

It's sad really. One day you are drawing a salary of X dollars. The very next day your value to the company depreciates for no reason other than you've just hit 62. If you continue to do the same work, it's only fair that you continue to receive the same pay. Anything less is clearly a case of discrimination against older workers.

Ministry of Manpower's Portal for Re-employment of Older Workers, Singapore.

Ultimately, it's up to the individual older employee to prove that advancing age in no way diminishes his work efficiency. If he can still put in a good day's work, he deserves to be fairly remunerated. Surely all his years of loyal service to the company plus his wealth of experience must be worth something.