The most pertinent question seems to be whether there will be sufficient savings for the retirees.
Economic blogger Hishamh told theantdaily that having sufficient savings for retirees is already a problem now, what more when the elderly make up a bigger portion of the population.
"We are not an old society yet. Within 30 to 50 years, we will be an "old" society. The effect on the economy will be long term.
"(Having) sufficient savings for retirement is already a problem and it's a problem we need to solve and it's better to solve it now," he said.
Hishamh said the government has a few options on its hands to prepare for this eventuality, including increasing contributions and capping withdrawals.
However, he opined that these options would be met with protests from employers and employees.
The Establishment Post on Aug 20, 2013, reported that one out of every 10 Malaysians will be aged 65 years and above by 2021.
"Malaysia may grow old before it grows rich. The rate people become older could be faster that the growth of income per capita. Presently, more than one out of five households headed by those aged 65 and above is living in poverty.
"Looks like Malaysia is heading towards becoming a nation of cash-strapped retirees," said the report.
It said the amounts in the Employees Provident Fund (EPF) of most Malaysians were hardly enough with more than 75 per cent of retirees at 55 having less than RM50,000 in their EPF savings.
"If they use, say RM5,000 of their EPF money to support themselves each month, then they would have used RM60,000 a year. It is no wonder many retirees use up all their EPF savings within one year after retirement," the report said.
The article added that government servants, who form only 11 per cent of the workforce, have pension schemes for retirees till the day they die, which is then given to the surviving spouse.
However, Hishamh contends that even government employees, especially those lower down the ranks, will also be facing problems surviving on their pensions due to the amounts they would be drawing after retirement.
"The EPU (Economic Planning Unit) is working on something right now in terms of a social security net but it's still in the very early stages," he said.
Hishamh added that healthcare and labour implications will also be factors to be concerned about as the country's population becomes an "aging" one.
He said raising the retirement age further was one option the country could look at.
"It should have been raised to 65 instead of 60. Right now the labour force is growing really fast as we are getting labour from those born in the 1980s and the 1990s but that will fall.
"The growth of the labour force in the 1980s and 1990s was about five per cent but it's now about three per cent," said Hishamh.
The minimum retirement age for the private sector was raised from 55 to 60 effective July 1, 2013, while for public sector employees, the retirement age was raised to 60 from 58 in 2011.
Former premier Tun Dr Mahathir Mohamad may have had a point when he advocated a 70 million population by the year 2100.
"He was planning for the long term but to have had loads of children, families would have had to invest in them and that would have reduced consumption in favour of long-term investment.
"That would have affected the economy. We are reaping the benefits of those who actually went out and had children as those children are the ones now entering the workforce," Hishamh said.
Due to declining fertility rate in the country, Hishamh said the government must invest in education to ensure a workforce of quality.
"Population growth is expected to be less than one per cent. We have to invest in education to make sure that those in the workforce are really educated and are equipped with the right skills," he said.
It was reported that Malaysia's fertility rate is 1.98 which is below the replacement rate of roughly 2.1 children per woman, while the life expectancy is 77.33 for women and 72.65 for men.
Economist Prof Datuk Dr Amir Hussin Baharuddin said the government will also have to plan for a more vibrant younger generation who are equipped with good skills, good leadership qualities, are innovative, creative and with equal or better productivity than the previous generation.
"This is because there will be a cost incurred to take care of an older generation. That's why we need a more vibrant younger generation. The elderly have already served the nation but it is the younger generation who will have to make up for them," he said.
But www.allianz.com reported World Health Organization Department of Ageing and Life Course director John Beard as saying aging is an opportunity.
"There are 85-year-old people who hold down incredibly high-pressure jobs, are incredibly healthy and basically performing like a 35-year-old," he was reported to have said.
To utilise this "opportunity", however, the government has to start planning to ensure the "elderly" are adequately taken care of especially in terms of health and savings.
As Amir Hussin put it: "We have two more planning periods in the next eight years and we can make it. But don't waste time, don't have political battles and by-elections all the time.
"Let's have an orderly society and a good nation and let's take care of our elderly."
By Sonia Ramachandran, The Ant Daily
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