Ageing in Malaysia: Rethinking Retirement Age in the Context of Demographic Transition

Abstract

Population ageing is a significant ongoing trend, influencing labour markets, savings, and social protection. Malaysia has shifted to an' ageing society' and is expected to reach an' aged society' by the late 2040s, yet employment laws still adhere to a fixed retirement age of 60. This setup interacts with defined-contribution schemes and pre-retirement leakages, leading to documented risks of inadequate retirement funds and increased poverty in old age. This paper explores how Malaysia can better align retirement timing and post-retirement work, analysing social impacts, design options, and feasibility through qualitative review of legislation, statistics, national plans, and international data from 2019 to 2025. It also compares Malaysia with ASEAN peers and other Asia Pacific countries. The SOC framework helps explain varying work capacity among older individuals and guides job and policy development. The analysis advocates for a phased, longevity-linked increase in retirement age within an integrated framework, with legal and policy reforms such as re-employment obligations, functional ability assessments, targeted reforms in retirement packages, employer support (including job redesign, age management, and mediation), and specific equity considerations for hazardous and long-serving workers.  The proposed policy package and sequencing, aligned with RMK-13, aim to boost participation, improve adequacy, and ensure fairness and sustainability for Malaysia's older workforce.