Retirement systems and pension reform: A Malaysian perspective

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Abstract. This paper reviews and assesses emerging issues in retirement systems and pension reform in Malaysia. The pension system models proposed by the ILO, the World Bank and the Geneva Association are compared and analysed, provid-ing a useful conceptual framework for the design and reform of pension systems. This framework is then used to assess pension reforms in Malaysia, analysing the relative advantages and disadvantages for workers. The authors conclude by pro-posing a number of recommendations for retirement system design and reform. T he retirement system is of crucial importance to the labour force and to organizations. It involves a process that starts at the beginning of an in-dividual’s career and extends throughout his or her working life and retire-ment. One important component of retirement systems is the choice of pension scheme – a matter that has become increasingly complex, while desirable op-tions available to employees become increasingly restricted. People are made aware of pensions as early as in their teens: when Furnham and Goletto-Tankel (2002) surveyed a sample of British young people aged between 16 and 21 on their knowledge of, and attitudes towards, savings, pensions and life insurance, they found varying degrees of awareness and understanding of pensions. Re-plies from respondents ranged from “a job with an organizational pension is important to me” to “private pensions are necessary if you want a good qual-ity of life in old age”. Retirement systems, and studies on this subject, therefore, continue to attract extensive attention from employers, employees, researchers and governments alike.