Former EPF chief calls for review of retirement age

KUALA LUMPUR: Malaysia's retirement age is back in focus as former Employees Provident Fund (EPF) chief executive officer Tan Sri Shahril Ridza Ridzuan calls for a review, while labour and employer groups differ over raising it.

Shahril, who is now Axiata Group Bhd chairman, said longer life expectancy and Malaysians' willingness to remain economically active could justify more flexible working arrangements beyond 60, including part-time work.

"This is something that really needs to be reviewed. The reality is that many Malaysians will continue working. When we reach 55 or 60, we still want to work," he told reporters after a panel session at the International Social Wellbeing Conference (ISWC) 2026 on Wednesday.

"So, in terms of the retirement age, perhaps we need to review it because life expectancy is also increasing. If we look at it now, it has reached 78 years," he added.

Shahril said flexible working arrangements could help older Malaysians remain economically active.

"Whether it is one or four (days) of part-time work, or perhaps through the economy, we should encourage people to remain productive.

"Because when it comes to retirement, if you retire but there is no productive use of your time, it is actually not good for you in terms of your mental and physical health," he said.

His call received support from the Malaysian Trades Union Congress (MTUC), which said it had proposed raising the retirement age for private-sector workers to 65 in 2018.

MTUC president Datuk Abdul Halim Mansor said the government had not agreed to the proposal at the time, citing concerns that a higher retirement age could reduce employment opportunities for younger workers.

"However, what we are seeing is that Malaysia continues to depend on foreign workers, with more than three million foreign workers currently in the country.

"MTUC's proposal is based on workers' capabilities, skills and good health. Raising the retirement age would help increase EPF savings and shorten the period of retirement to around 10 years, based on an average life expectancy of 75 years," he told Business Times.

He said workers who remained employed could also benefit from staying physically and mentally active.

Requiring workers to retire at 60 could leave them less active and affect their mental alertness, potentially contributing to earlier health issues and increased stress, he said.

"The retirement age should be formally amended under the Minimum Retirement Age Act 2012.

"Amending the minimum retirement age would allow workers to continue making compulsory contributions to the EPF under the Employees Provident Fund Act 1991, while ensuring that their employers' contributions and related benefits remain protected," Halim said.

He said workers would also continue to receive protection under the Employees' Social Security Act 1969, including employment injury protection, the Employment Insurance System and the 24-Hour Scheme.

They would also continue to enjoy employment benefits under the Employment Act 1955, including sick leave and medical benefits.

"These benefits would be available to workers through an amendment to raise the minimum retirement age to 65," he said.

Flexible Approach To Retirement

However, Malaysian Employers Federation (MEF) senior adviser for government, media and international engagement Datuk Syed Hussain Syed Husman said a blanket increase in the retirement age may not be the right approach.

The decision should ultimately be an individual choice.

"There are jobs where people are offered contracts after retirement and continue doing the same job. All of this depends on both parties and whether they want to continue.

"There are also opportunities for retirees to work on a consultancy basis, where they may only work a few days or when their expertise is needed. So, our employment environment is already quite flexible after the fixed retirement age of 60, or 65 in some sectors," he said.

Hussain, who is former MEF president, said the decision should ultimately be left to retirees, as they should be able to decide what works best for them.

"A one-size-fits-all approach to extending the retirement age may not work, as there are many other issues that need to be considered," he said.

Meanwhile, on lump-sum retirement withdrawals, Shahril said members should consider leaving their savings with EPF if they did not immediately need the money.

EPF could continue investing the savings and paying dividends, allowing members to plan phased withdrawals during retirement, he said.

"If you don't need it, or you don't have a better use for it, then just leave it with EPF. We will continue to invest it for you, you'll get a dividend, and you can then plan a phased drawdown. It's always better for you," he said.

Shahril acknowledged, however, that some retirees needed lump-sum withdrawals to meet financial commitments.

Those reaching 55 might need to settle housing or other loans, with their EPF savings potentially their only source of funds, he said.

Shahril said the broader challenge was ensuring Malaysians accumulated enough savings during their working years to meet their retirement needs and other financial commitments.

He said fewer members were making full lump-sum withdrawals at 55 compared with about 15 years ago.

"In the past, when I was first with EPF, 15 years ago, the percentage of people taking a full lump-sum withdrawal at 55 was very, very high. But now, that's coming down," he said.

Shahril attributed the decline partly to greater financial literacy and Malaysians accumulating more savings outside EPF.

He said Bank Negara data showed cash deposits and investments had also increased over time.

"So, I think people are generally better. And you would expect that because as a country matures and there's more income, people save more. But, of course, we still have to do the education, have to encourage people not to take everything out," he said.