Are Malaysians ready for the Silver Tsunami?
One of the megatrends that shapes the 21st century is demographic and social change—with the global population projected to increase to 10 billion by 2050. The data also indicate that the world’s population aging rapidly, as the rate of persons aged 65 or above accelerates from 9% in 2019 to 13% in 2030, and up to 16% by 2050.
Globally, the population aged 65 and over is growing faster than all other age groups. The record in 2018 marked a new history when the persons aged 65 or above outnumbered children below five years old.
An aging society is defined as a society where 7% of total population comprises of persons aged 65 or above while a super-aged society consists 20% of total population. In Malaysia, we are in transition from an aging to a super-aged society in the next 25 years, as the rate hit 7% in 2020 and projected to double to 14% in 2044 and 20% by 2056.
Several factors contribute to the social transformation into an aging society such as fertility, mortality and migration. Life expectancy rose substantially since 1950 but job demands, urban lifestyle and high cost of living led to the decline of young population. Lower birth rate had also been affected by late marriage and fertility issues. Besides, the technological advancement in healthcare has improved the old age survival which accounts for the overall shift in demographic composition.
Are Malaysians ready for the Silver Tsunami? Our life expectancy has increased from 65.0 years in 1971 to 76.5 years in 2021. However, a longer life does not necessary means we are living better and healthier.
Malaysia’s healthy life expectancy is estimated at 66.6 years in 2016, a shortfall of about 10 years’ life expectancy. The gap between life expectancy and healthy life expectancy is partly due to rise of chronic or non-communicable diseases (NCDs). The top list includes hypertension (37%), high cholesterol (21%) and diabetes (19%).
Many of them mainly depend on public healthcare facilities. Only few are having adequate medical coverage from private health insurance or takaful. If this trend continues, we can expect a steady increase for public health expenditure in the future.
In addition, public financing for aged care service is also critical. Traditionally, the care and support come from family members who dwell together under the same roof. These days, family structure has changed to a small, nuclear family and intergenerational co-residence is uncommon. More social support is needed to take care of destitute older persons who are having dementia or any difficulties to perform their daily activities.
Old age income support posed another challenge. While majority of the labour force is covered by designated retirement schemes such as EPF (48.9%) or KWAP and LTAT (11.9%), another 39.2% remains uncovered. Moreover, almost three quarters of EPF contributors will have an annuitized amount of less than RM1,050 monthly and over 40% will have less than RM420 per month upon retirement, which means many may fall into extreme poverty.
COVID-19 related withdrawals, namely i-Sinar, i-Lestari and i-Citra have had a massive impact on EPF savings, leaving only 3% that can afford comfortable retirement. EPF members with critically low EPF savings have increased to 48%, a 28% increase as compared to the figure prior to pandemic. The pandemic has also changed the employment landscape towards a gig economy. The growth of the self-employed and informal sector is expected to increase from 5.7 million currently to 8.8 million in 2040.
For women, not all of them can benefit i-Suri. Many are uncovered by retirement schemes as they work in informal sector, self-employed or engaged as unpaid family workers. Majority of aged care workers are also women. For those employed in a formal sector, the gender wage gap resulted an average EPF account balance of RM177,000 for women, as compared to RM233,000 for men at age 54.
Women also tend to retire earlier. Data in 2016 reveals that only 17.9% women were still employed at the age of 60, in comparison to 59.7% of men. With zero or low retirement savings plus longer life expectancy for women (78.3 years) as compared to men (73.2 years), they definitely deserve special needs and social protection.
What is the best way to prepare ourselves as a super-aged society while aspiring to be a high-income nation? It is a cause for concern for all as it calls for policies to support the increasing demand for healthcare and old age income support. One way is turn the silver tsunami into an opportunity for a silver economy. But to achieve this, we need to promote a holistic and healthy aging lifestyle with psycho-spiritual intervention.
To reduce the fiscal burden, we should strengthen the third sector economy. Zakat and Baitulmal institutions need to incorporate old age poverty into their future distribution policy. In this respect, the initiative to build the Madinah Mawaddah Waqf City as a retirement village is worth mentioning.
