Friday 29 Mar 2024
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KUALA LUMPUR (Oct 10): The government has been urged to revamp the public pension scheme to one which will see new employees in the public sector contribute to their retirement, similar to that of the private sector's contribution to the Employees Provident Fund (EPF), in a move to achieve fiscal prudence.

This is one of the suggestions by Socio-Economic Research Centre (SERC) executive director Lee Heng Guie.

Pension or retirement charges have been growing at a rapid rate of 10% per year to RM19.5 billion or 9.1% of total operating expenditure this year, from RM8.33 billion or 6.7% in 2006, he said.

"The rate of increase accelerated over the period of 2011 to 2015, which saw pension and gratuities grew by 10.4% per year to RM18.8 billion in 2015 versus RM13.6 billion in 2011," he told a press conference after revealing SERC's quarterly economy tracker report here today.

SERC is an independent think tank under the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) that carries out in-depth research on socio-economic issues.

"Even in the Euro zone, the government is also facing increasing (financial) pressure over the pension fund due to rising population," he said, noting that it is not sustainable for the Malaysian government to fully bear the public pension scheme.

He also noted the government will need a strong political will to implement the reform suggested.

"The reform will help (the) government (cut) their operating expenditure," he added.

"The government has to bite the bullet and embrace the reform," said Lee, who believes the next general election will be held soon.

Lee also expects Malaysia to achieve a gross domestic product (GDP) growth of 4% to 5% in 2017 although the economic environment will remain challenging.

"With the global trade likely to remain soft, the potential for Malaysia to enjoy high GDP growth could be from an economy wide productivity growth," he said.

He also said private consumption and investment are likely to continue to support the country's economy.

Sector-wise, Lee sees the services sector leading the run, followed by the manufacturing and construction sectors.

On the overnight policy rate, he does not think Bank Negara Malaysia will further slash its key interest rate this year.

Having said that, Lee expects a further 25-basis-point rate cut next year, subject to external environment as well as the upcoming budget's initiatives.

 

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