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How the public pension burden could bankrupt the country

savemalaysia
Publish date: Sun, 22 Sep 2019, 09:17 AM

KUALA LUMPUR (Sept 20): A reform of the civil service pension scheme has been studied for years but left on the backburner for fear of upsetting a sizeable vote bank. Yet the painful reform that could cost the Pakatan Harapan government the next election is necessary and overdue.

“We are paying pension to wives and children [of deceased retired civil servants] …We want to continue [paying pensions], but we have to find a way that the government can afford and government officers don’t lose out,” Prime Minister Tun Dr Mahathir Mohamad told reporters in Kyoto on Sept 7, noting the strain of steep civil servant pay hikes in recent years as well as the RM1 trillion national debt on government finances.

“Payments of pension are now a problem… previously the monthly salaries of senior officers never exceeded RM6,000 or RM7,000, and they would receive RM3,000 pension a month. But we are also aware that living costs have increased considerably, so we need to study the pension scheme from time to time,” he told reporters separately in Alor Setar on Sept 10.

Thanks to the previous administration eagerness to please this growing vote bank, there is a 2% annual automatic increment for pension payments – neutralizing even the worry of inflation on the civil service pensioners’ income, a rarity globally where the norm is for shared burden or borne entirely by retirees instead of being guaranteed by taxpayers’ money.

Private wage earners in Malaysia -- who need to set aside money from their monthly salary into the EPF -- would have to depend on the Employees Provident Fund to earn enough money from investments to beat inflation’s dilutive impact on their retirement savings.

Those who outlive their savings (many do within five years of retirement) may have to turn to government assistance, possibly at further cost to taxpayers if public finances are tight. The impact on the economy would be worse, should the strain be a drag on businesses and consumer confidence and consumption.

Former Public Service Department director general Borhan Dolah on Sept 4 said newly appointed civil servants may no longer be pensionable but be given an improved contract scheme, possibly starting next year to reduce to government’s financial burden by up to RM5 billion a year.

The move to revamp the public pension scheme, which is “still being fine-tuned”, was consistent with the decision to reduce the civil service size in phases based on need, as recommended by the special Public Service Reform Committee meeting in October 2018.

For more details on the public pension burden and how government finances would look like if expenses grow on its current trajectory, pick up the latest issue of The Edge.

 

https://www.theedgemarkets.com/article/how-public-pension-burden-could-bankrupt-country

 

Discussions
1 person likes this. Showing 8 of 8 comments

TECHfullyBREWED

It would be a masterstroke for PH govt. if they are able to restructure the pensions scheme for elected representatives.

2019-09-22 09:51

mansaham1972

Pencen tidak akan membankrapkan negara tetapi kebodohan dan kebebalan kerajaan yg mentadbir boleh hancurkan bumi bertuah ini.

2019-09-22 10:19

shortinvestor77

one person job 10 persons do.

2019-09-22 16:48

ks55

Population of Malaysia 32 million
Serving Civil servant 1.7 million
Govt pensioner 812K

That is to say 2.5 million to be fed by number of workers excluding 2.5m (Govt servant + pensioner), less those students (10m), less those above 60 years old non govt pensioner (2.6m) = 16.9m

That is to say, for every 6.76 able-body irrespective whether they are working or not, have to support 1 serving govt officer or pensioner.

If you minus those drug addicts, those serving jail sentences, those OKU, those housewives, and those voluntarily unemployed, working population may be even much less.

If you want add to those retirees (above 60 years old and non govt pensioners) about 2.6 million, very likely for every worker (excluding civil servants), he would have to feed more than 3 people excluding himself.

So, it is wise not to depend on your children for financial assistance when you are old. Just let them struggle to feed themselves and their family............

2019-09-22 17:49

i3lurker

lets start a business to marry off young 18 y/o to old age pensioners about to conk off

these young 18 y/o will continue receiving pension money until they conk off in say 70 years time.

can make billions of RM from Malaysian Govt. Better than 1 MDB scam

its fully legal.

2019-09-22 18:13

speakup

u think Pakatan cares if country go bankrupt? they only care about their own pockets!

2019-09-23 09:17

DreamKentut

“We are paying pension to wives and children [of deceased retired civil servants] …We want to continue [paying pensions], but we have to find a way that the government can afford and government officers don’t lose out,” Prime Minister Tun Dr Mahathir Mohamad told reporters in Kyoto.

LOL, stupid fellow this Prime Minister. Being a doctor himself, he should know that
gangrened limb's infection spread into bloodstream must be amputated instead of nursing, otherwise, it's fatal. Wonder if he is really a qualified medical doctor. Perhaps, just scraped through.

2019-09-23 09:26

speakup

talk is cheap!
PH cut the pension! i dare u PH!

2019-09-23 09:30

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