LETTER | The government's decision to consider changes to the pension scheme for civil servants is a timely and positive move. The 1.6 million government employees and more than half a million pensioners are a severe drain on the government's resources and coffers. About 40 percent of the budget is allocated to these two categories leaving the remaining 60 percent to the increasing needs for development and other expenditure. The pension scheme, which was started by the British, has long outlived its purpose in attracting and retaining employees for the government.
Today, the private sector attracts the best and most qualified. The government now has to grapple with the legacy left by the British employment scheme - longevity of pensioners, hefty medical bills, derivative pensions for dependants, the security of tenure that has encouraged dereliction of duty, corruption and disciplinary problems. Additionally, there are other incentives such as bonus, cheaper housing and pension increments yearly to keep pace with inflation that the government has to provide.
The pension scheme is basically discriminatory as it is confined only to civil servants and the employees in the private sector (the B40 and M40) have to fend for themselves after retirement with their EPF savings which may not be of much worth considering the ballooning cost of living. Due to the high cost of the pension scheme, the government is not able to help the lower-income groups because of the lack of resources.
The recent UN report has indicated the need for the government to re-look at its poverty eradication efforts and overcome poverty through more holistic methods, one of which will be the creation of a welfare state. Increasing the retirement age again from 60 to 65 will not be the right solution to address the financial situation of senior citizens who will also be suffering from various ailments at that age. The senior citizens should retire for good and the welfare state should take care of their needs.
The pension scheme has also led to a "brain drain" from critical government sectors such as medical specialists as the government is unable to match the salaries offered in the private hospitals due to the high pension factor involved in the future. If it was not for the pension scheme the government could raise the salaries as are offered in the private sector. Top professionals in the government need to be paid suitable salaries but the government has to consider the pension factor.
Needless to say, the government, if it does away with the pensions, has to come with a scheme like the EPF whereby contributions have to be paid by both the civil servants and the government just like the employees and employers in the private sector. Politicians such as ministers and members of Parliament, the Senate, state legislative assemblies and others who draw high and multiple pensions, need to have a separate scheme for their retirement. Practically anyone who has any work to do with the government becomes pensionable and this has become a heavy burden for the federal government.
The government has to reduce the number of its employees drastically. In the present era of information technology and computerisation, outsourcing of tasks and the contracting out government projects, there is no justification for this huge number of 1.6 million civil servants. A leaner workforce will be better and easier to deal with. There must also be a more equitable method of recruiting government employees to ensure that there is at least one worker from every B40 family employed in the government or the GLCs to enable employment benefits to be spread out wider.
Abolition of the pension scheme will also enable private-sector workers especially professionals and those with skills and expertise to work for the government and vice versa as is the case in the US. Such cooperation, interaction and collaboration will be better for the country. Presently, the pension scheme, age and other terms of employment prevent this noble initiative. There is also an impression that the entire civil service salaries and pensions are mainly contributed by taxation from the private sector as the government sector is well known for its low productivity.
This has created an imbalance in the economy and prevented the private sector workers from getting more benefits. The government often claims that Malaysia's progress is due to the inter-dependent relationship between the government and the corporate sectors. The private sector and country could progress even more if not for the red tape, abuse of power and corruption prevalent in the government sector.
The government needs to adopt a more egalitarian approach through a social security system that cares for all citizens post-retirement. The more preferential pension scheme and the less attractive EPF/Socso schemes have created dualism and prevented the creation of a welfare state in Malaysia. The Socso and the MySalam insurance coverage leaves out senior citizens who are most vulnerable after retirement. The victims are the needy citizens who have given the best years of their life working for the country but end up in poverty in their old age. Surely, the country can do more for its people.
The merging of the EPF, Socso and Kwap can be the basis of the welfare state, and contributions by all workers must be mandatory to ensure all citizens can derive the benefits. Individuals who want to save more on their own or through their employers for their retirement are free to do so.
The government has to banish the thought of civil servants being a supportive vote bank, which is one of the reasons for the favouritism and the vast increase in the number of civil servants and the quantum of pensions being reviewed at almost every budget. The lowering of the voting age to 18 for the next election, when a few million youngsters will be part of the electorate should erode the vote bank dependence on civil servants.
Contributions by both private and government workers towards a common fund can be the basis of the welfare state and the resulting large fund can also be used for various development programmes to enhance economic progress. The government pension scheme catering only for its workers is discriminatory and has to be abolished for the creation of a welfare state to promote and protect the well-being of all citizens.
The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.
