There is more to a decent income in lengthening old age than individual savings: a discussion of income security for old age in Singapore and Malaysia

Findings:

• individual savings alone do not represent the best option for income security into old age
• increased access to savings prior to retirement, through dedicated accounts and specified schemes, lessens the ability of provident funds to meet their primary objective, namely securing a reliable and adequate source of income for members
• current arrangements are inadequate in meeting the needs of an increasingly elderly population and thus leaves them vulnerable to the socially exclusive aspects of poverty in old age

The paper concludes that both countries' schemes share common faults, which include low final balances, early access to savings linked to a relatively low retirement age, lack of guaranteed income into old age (despite the minimum sum schemes), mixed messages on individual savings, nor in the case of Malaysia continuing to develop the EPF along similar lines to that of the CPF, which as this paper clearly demonstrates, does not meet basic requirements of old age income equitably for all members.

In terms of the future, the paper argues that Malaysia is in the somewhat enviable position of having time on its side. The rate at which the Malaysian population is ageing, allows for the implementation of social policy reforms, such as the introduction of a social insurance based pension, which would offer a minimum guaranteed income to those on low incomes, alongside the undoubted benefits which are available under the EPF, but would also include the sizeable proportion of the labour force who are not covered at present by any scheme. The current arrangements in Singapore and Malaysia, under the auspices of the CPF and EPF respectively, can both be described as a form of social security umbrella. However as we have seen, neither scheme is able to protect all sections of society, nor indeed all current members, from future inclement weather.