Ageing society has long term implication on fiscal position: EPF CEO
Published on: Sunday, March 03, 2024
By: Bernama
Malaysia’s demographic landscape is reportedly undergoing a significant transformation, with the proportion of elderly citizens expected to soar to 40 per cent by 2043. (Bernama pic)
SHAH ALAM: Malaysia’s demographic landscape is undergoing a significant transformation, with the proportion of elderly citizens expected to soar to 40 per cent by 2043, highlighting critical implications for the nation’s fiscal outlook, said Ahmad Zulqarnain Onn, chief executive officer of the Employees Provident Fund (EPF).
With a projected population of 39.9 million, the elderly population aged over 66 years old is anticipated to reach 5.6 million, while the working-age population (aged 15 to 64 years old) is estimated to hit 27.3 million.
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“Studies have shown that for every 10 per cent increase in the age population, we will see a 5.5 per cent decline in Gross Domestic Product,” he said during the EPF’s performance and dividend announcement here today.
Ahmad Zulqarnain highlighted that as society ages, the stresses and pressures on the healthcare system will increase and the country’s tax revenue is expected to decline as a larger portion of the population retire.
“Healthcare costs will go up, as will social security costs, putting significant pressure on the fiscal position,” he said.
According to Ahmad Zulqarnain, Malaysia’s population is ageing faster compared to other nations.
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He noted that key challenges include inadequate savings which would exacerbate old age income insecurity, the majority of adults in the labour force would not be covered by a retirement scheme, and a mismatch between the full withdrawal age and the national minimum retirement age amidst a longer life expectancy.
Meanwhile, Ahmad Zulqarnain said 2024 is set to be an eventful year for the EPF as it embarks on several initiatives to meet the evolving needs of EPF members, ensuring financial resilience and well-being during their retirement years.
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“The ongoing trend toward a higher prevalence of informal employment over formal employment will serve as a driving force behind the continued implementation of EPF’s strategic initiatives,” he added.
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