Saturday, April 30, 2011

NOT QUITE READY TO RETIRE

The Sunday Star: 24 April 2011
The letter above highlights the predicament many Malaysians face upon reaching their 55th birthday. They start to worry about their impending retirement. While there may be some who eagerly await their last day at work so they can be boss of their own time, there are others who dread receiving their retirement letter.

With the average life span at 76, you need to have at least RM1m saved up to see you through the next 20-25 years of retirement if you plan to maintain your current lifestyle. Inflation will push the figure even higher. It's a scary thought, especially if you have a retired spouse and elderly parents to support. The healthcare expenses alone can strain and drain your limited financial resources. Most retirees would want to remain on the company pay-roll as long as possible. Not everyone has the means or the aptitude to start their own business.

The Star: Sat 30 April 2011
The retirement age for civil servants has been raised from 55 to 58. For the private sector it remains at a young 55. The government wants stakeholders in the private sector to consider upping this to 60. In Singapore, by 2012 it will be mandatory for companies to retain older workers till aged 62. France recently raised the retirement age to 62, and in Australia, there's no official retirement age. Raising the retirement age will give older workers more time to accumulate sufficient savings to see them through their non-working years.

Straits Times 29 April 2011
The World Bank's 2011 fact-book on migration shows that for every ten skilled Malaysians born in the country, one of them elects to leave the country. This is double the world average. With the massive brain drain and exodus of talent from the country, re-hiring older workers is one way to stem the haemorrhage. Other countries suffer loss of home-grown talent too. However, as in Singapore, this is compensated by a large inflow of skilled workers and professional experts. This is not the case in Malaysia.

For more, read the special coverage on Malaysia's brain drain in today's Star.

Wednesday, April 27, 2011

HIGH HEALTHCARE COSTS EATING INTO RETIREMENT FUNDS

If you have set aside some funds for medical contingencies not just for yourself and your children, but also for your elderly parents, give yourself a pat on the back. You are better prepared than probably 90% of your peers.

How many of us factor in our elderly parents when we save for our retirement years? What happens should some misfortune or mishap befall them and they end up in hospital or require expensive long-term healthcare? It's a sure bet they are not covered by insurance. The few insurance companies that offer coverage for the elderly charge ridiculously high premiums.

Whether it's hospital charges, doctor's fees, medical examinations, health supplements, etc, we end up paying on behalf of our aged parents. Who among us do not have parents in their 70s and 80s who require financial support?

What surprises me is that few retirement planning consultants advise their clients to allocate funds for parental maintenance. My mother's recent surgery and hospitalization plus her aftercare and medication cost a bomb. Fortunately the whole family rallied together and we split the costs.

My mom's prescribed drugs cost RM300+ a month.  
What about those who have no access to financial recourse? Healthcare costs whether for yourself or your family members can swallow up all your retirement savings and reduce all your carefully laid-out retirement plans to shreds. You can easily end up in debt or in the poor-house from paying for all these out-of-pocket expenses.

The Malaysian government has been discussing the idea of setting up a National Healthcare Financing Scheme (NHFS) to make healthcare accessible and affordable to all Malaysians. Now almost twenty years on, nothing's been finalized as yet.

So what's holding up the implementation of the NHFS? One reason given by Health Minister Datuk Seri Liow Tiong Lai - "It involves reviewing the Medical Act 1972 (71?) and that takes time". 20 years to review a 44-page document?

Perhaps it's just as well that the NHFS is still on the drawing-board. There are too many questions about the scheme that need to be addressed.

For more about the NHFS, please click on the related links below:

Not all stakeholders are giving the thumbs up for the NHFS. The Malaysian Medical Association (MMA) has plenty of reservations. (Click on the link for recommended reading.)
The above article in The Star 24 April raises some valid concerns about the proposed National Healthcare Financing Scheme '1Care for 1Malaysia'. The article first appeared in Malaysiakini 19 April.
While the Malaysian government is dragging its feet over the NHFS, about a decade ago Singapore's Ministry of Health (MOH) introduced the Primary Care Partnership Scheme (PCPS) for elderly patients aged 65 and over, who come from homes with a per capita income of S$800 (RM2000) a month. Others who are eligible are the disabled from a similar income bracket, and those who are unable to work due to old age, illness or disability.

The PCPS allows them to see a general practitioner (GP) in a private clinic, but still pay subsidised polyclinic rates. Eligible patients pay S$5.20 for consultation at a polyclinic, and only 70 cents for a week's supply of each type of subsidised medicine. (Graphics: Straits Times)

The scheme got off to a slow start as participating GPs complained about the paperwork involved in getting payment from the Health Ministry. They were also not happy about having to prescribe cheaper generic drugs to lower costs for their elderly or disabled patients.

But with rising healthcare costs, more Singaporeans are turning to the PCPS. Last year, 32,000 eligible patients made more than 70,000 visits under the scheme. There is now a call to extend the scheme to benefit all lower income groups irrespective of age. This is evident of the success of the PCPS.

Can Malaysia's proposed NHFS emulate PCPS's success?

A Malaysian polyclinic
Postscript: Just read that a financially ailing and little known private company Tricubes has been awarded the lucrative 1Malaysia e-mail contract worth RM50million to provide Malaysians with a secured personal email for government billings, payments and notifications.

Only days ago the PM gave his assurance that "no public funds will be used for 1Malaysia e-mail project". Now Tricubes has confirmed that it will be charging various government agencies 50 sen per email transaction. Sounds very much like taxpayers' money being used to bail out a financially distressed company whose shares have skyrocketed since the news broke that it has been awarded the government contract.

The StarBiz 27 April 2011
Against this backdrop, the MMA and other stakeholders have valid reasons for voicing their fears that the government will be similarly throwing out a lifeline to a dubious private company that stands to reap huge profits from the NHFS. Both projects aim to benefit the people, but it's the implementation that many stakeholders are questioning. The public needs to be reassured that everything is done above board, and that no cronyism or vested interests are involved.