Perceived Benefits and Drawbacks of the Retirement Age Policy in Malaysia: HR Perspective

Abstract

Continuing improvements in life expectancy means that people will live longer on average than any previousgeneration. The combination of increased life expectancy and new retirement age policy in Malaysia hasimportant implications for human resource management. Recently, the Ministry of Human Resource of Malaysiaproposed a bill to increase the retirement age in the private sector to 60 years which has resulted in a swirlingdebate. This has raised many arguments implying demographic, economic, social and political points of view;both in favour of, and against the proposed policy. Malaysia has been slower in taking steps to increase theretirement age as compared to neighbouring ASEAN countries. According to the International Institute ofManagement, there are a number of countries with higher retirement ages which are ranked higher than Malaysiain terms of productivity and economic scale. It is imperative to study the implications of the proposed new policyfrom the aspect of human resources. In this study, an open-ended survey of 230 currently employed individuals ofvarying demographics was conducted in a number of cities across Malaysia (Kuala Lumpur, Penang, Ipoh,Kuching Kota Bharu and Johor Bharu) to determine reactions and opinions about the imminent retirement agepolicy changes. The collected qualitative data was analysed for the emerging key themes using a coding method.The data was analysed by reading through more than 230 scripts, sorting the opinions into specific responsecategories and grouping common themes and repeated words and phrases. Although the findings suggested thatmost of the respondents (86%) agreed to raise retirement age policy, some remains skeptical (14%). Among thepositive points stated by the respondents are the contribution to the nation growth, ensure financial security,reduce reliance on foreign labours, mental and physical fulfillment for older workers. The majors perceiveddrawbacks among respondents are on the issues of potentially reduce job opportunity, career advancement foryounger workers, low productivity and higher cost compare to younger employees. Findings of this study couldprovide better understanding regarding the spectrum of opinions regarding the policy of increasing the retirementage in Malaysia as well as other nations, especially in the private sector.