Employers in Malaysia urged to plan for succession ahead of retirement wave

Kuala Lumpur

MALAYSIA could have a crisis on hand as its population ages.

It is already well known that a good portion of retirees in the country are financially unprepared for that phase in their lives when they are no longer earning, but the greying tide also brings implications for organisations in the public and private sectors, which are not doing enough to facilitate knowledge transfer and succession planning.

This could create a widening gap between supply and demand for talent, said global talent-management company Kelly Outsourcing & Consulting Group.

Its vice-president for the Asia-Pacific Anthony Raja Devadoss said: "The majority of today's soon-to-retire work force is inadequately prepared for retirement. Both the private and public sectors need to play their respective roles to more effectively address this pressing issue."

Kelly has projected that the proportion of those aged 60 and up in Malaysia will double from the current 7 per cent of its 30 million population to 15 per cent by 2030.

"The willingness (to retire) is there, but not the readiness," said Mr Devadoss, whose company on Monday launched the Active Life Planning Programme, a retirement-assessment programme run in the Malay language.

Most Malaysian seniors have paltry savings. The Employees Provident Fund (EPF) said its 70,000 active 54-year old contributors had an average savings of RM167,000 (S$64,953) in 2013.

The recommended minimum is RM196,800.

Even more alarming is that nearly seven in 10 EPF contributors of the same age have under RM50,000 in their account, and many do not have savings outside of this. This is a great concern, given the average life expectancy for men in Malaysia is 70 and women, 75.

Analysts attribute the low level of savings to depressed wages; Malaysia has kept wages low for decades to make itself attractive to investors.

Another reason is that many Malaysians live beyond their means, preferring to sign up for costly installment schemes rather than wait until they have enough cash to buy something.

At the same time, the cost of living in the country has outpaced wages.

In recent years, the country's largest pension fund has flagged the looming retirement crisis, prompting the government to launch the Private Retirement Scheme as an additional investment programme for those who want to save separately.

In terms of succcession planning, Mr Devadoss said organizations need to be more proactive in encouraging their employees to plan for their retirement, and that they should explore avenues to re-employ retirees with vast experience and skills to continue working on a flexible basis; such senior employees could also be mentors to their colleagues.

The private sector, particularly the multinational companies, is more prepared in the area of knowledge transfer and succession than national firms and the public sector.

Mr Devadoss, calling for more to be done, said: "The ageing population is very apparent in the public sector, with more than 20,000 civil servants retiring annually.

"The eventual rise in the number of retirees will put additional pressure on the Malaysian government as health and welfare costs skyrocket."

He cited Singapore's airport as an example of an employer which has created employment openings for its senior employees, and suggested that such a programme could be emulated.