Malaysia is on the right track to improve the social security management of its labour force through the Employees Provident Fund (EPF), said Founder of the World Pension Summit, Harry Smorenberg.
He lauded the professionalism of the pension fund after seeing every step of the process at the fund himself and impressed with its budgeting as well as its ability to give financial advice.
“I have deep respect for what they (EPF) have accomplished so far and I believe they should be recognised. Comparing them to pension firms in the US and Europe, I think they are up to the standards.
“They are also now the first pension firm in the world to launch the Shariah-compliant pension scheme and I congratulated them for that,” he told Bernama on the sidelines of the 2016 International Social Security Conference here, today.
Smorenberg said that while many Western pension firms are now moving towards becoming more environmental, social and governance-compliant, Shariah firms had already complied by nature.
“So I think that is a great move by the EPF, and remember that the Muslim population is large here (Malaysia) and growing. We have to cater for that,” he added.
He however was shocked to find out that 44 per cent of the Malaysian labour force, predominantly the lower income earners, was not included in the pension scheme.
During the third highlight session yesterday, EPF Deputy Chief Executive Officer (Strategy), Tunku Alizakri Alias revealed that 44 per cent of Malaysians were not covered by a comprehensive social protection system, which predominantly comprised the low income earners.
“The chance of them going into poverty is also a social burden in the future. It has to be paid anyhow because people need financial support to live their lives after they have retired.
“So, it is better to start organising it now and make them join the pension structure rather than wait till the bill comes, so to speak. And among the first challenge to improve social security management is to also include those lower income groups,” Smorenberg said.
He also stressed that all employers, regardless of the sectors they are in, must include their employees into the pension scheme so that the labour force could at least have a base income.
Themed, “Active Ageing: Live Long and Prosper”, the two-day conference, which started yesterday, was co-organised by the EPF to discuss healthy ageing and establishing age-friendly communities, as well as encouraging engagement of the growing senior generation in the economic and social landscape.