Monday, July 4

Never too young or too old to retire

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CIVIL servants will now retire at 58 – up two years from 56 after the new policy was implemented on July 1, 2008.

The extension is not automatic but an option given to the individual who has been working in the civil service before the effective date. The offer of employment on contract terms after retirement will depend on the appointing authorities.

The idea of raising the retirement age to 60 has been bandied about but not followed through. The argument is that retaining retirees not only deprives younger people of jobs and promotion but also burdens the government financially,  given the already over-sized civil service.

In any case, attitudes towards retirement have now changed so much that the need for an average retirement age seems irrelevant. In terms of working ability and experience, people in their late 50’s and 60’s do not necessarily think they are over the hill.

Moreover, with more working couples having kids into their mid-30s or even early 40s, retirement, to them, seems a restrictive option. There are youngsters to raise, education
to think of and pay for — and housing and car loans to service. All these recurrent expenditures can be overwhelming if the average wage earner (of either sex) stops working even in
their 60’s.

Depending on lifestyles, people may put off retirement if they haven’t earned enough yet to enable them to live with a reasonable degree of independence in their twilight years.

It’s only natural for these people to want to continue working. Given their circumstances, retirement is a luxury they can ill-afford.

Another factor is inadequate payment of pension benefits. When people live solely on these incomes, even at the maximum level, reduced quality of living and financial difficulties often result.

Nowadays, many younger people, already struggling with rising costs, are wondering if there will be such a thing as retirement. Ultimately, people will simply need to work until they drop.
Should this happen, a sharp rise in average retirement age would follow.

It’s also quite obvious to most people — even 20 to 30 years away from potential retirement — that an average retirement age may well become a relic of the past unless they are able
to save enough to cover future needs.

Presently, the retirement age (58) only affects civil servants.

The Malaysian Trades Union Congress (MTUC) has been advocating  a similar mandatory retirement age for the private sector to achieve the goal of a high-income nation.

The MTUC argues without a binding law, most private firms are not keen respond to the increase (in retirement age) because they profit-motivated. Some are even taking issue with the suggestion to extend the 90-day maternity leave for government servants to the private sector, claiming such
a privilege is extravagant.

Regardless, a later retirement age will benefit workers in the long run as they will be able to save up more in the Employees’ Provident Fund (EPF). And since private sector employees don’t enjoy any pension benefits, a bigger EPF savings will certainly help them through old age.

Industries, too, will benefit from the experience of these workers who are also less prone to job-hopping, hence contributing to stability and productivity.

In France, the government’s move to raise the retirement age  from 60 to 62 – just two more years – touched off widespread revolt with strikes, rallies and fuel blockades bringing the capital city of Paris and the southern city of Marseille to a virtual standstill.

French President Nicolas Sarkozy defended the move as “inevitable” in the face of France’s rapidly growing population and burgeoning budget deficit but opponents accused him of making workers pay while protecting the rich and the world of finance.

The scenario is quite different in Malaysia. People here are keen to work and likely to support increasing the retirement age to 60 (if it is brought up again) to be on par with countries in the region, except Singapore where the people retire at 62.

More than 100,000 private and public sector workers retire annually. Bringing in cheap foreign labour as replacements only serves to project Malaysia as a low wage paying nation.

Lest we forget, this is antithetical to the government’s aim of making Malaysia a country of high income, and should therefore be kept to a minimum or considered only when  it’s absolutely essential.