According to a survey report analyzed by Economist Impact, among Malaysian wage earners of all ages, those aged between 25 and 34 are the most worried about their finances, with only a quarter of them having retirement funds such as provident funds.
The report titled “Realizing the Future – Seeking Financial Security for the Future: Challenges Facing Young Malaysians” explores how Malaysians of all ages are saving for the future and the challenges faced by young Malaysians in building financial resilience.
As Malaysia’s population begins to age, financial security in retirement has come under scrutiny, with this report revealing that less than half of Malaysians surveyed (48%) said they were satisfied with their financial situation, the second lowest figure among ASEAN countries.
“While more than half (57%) are confident that they have enough savings to live beyond the age of 80 and beyond, this is the lowest figure of all the countries surveyed.”
The survey found that 38% of 25-34 year olds said they were in more than one job, compared to 26% of 35-44 year olds.
In terms of savings, the report noted that only 25% of respondents in the 25 to 34 age group had retirement funds such as provident funds; compared to 40% in the 45 to 55 age group.
“Most of these people are likely to be in the early stages of their careers. However, slow salary growth, increasing cost of living, changes in the employment landscape and limited financial literacy limit their savings and ability to invest for the future.”
The Prudential Assurance Company of Malaysia Berhad (Prudential Assurance) Chief Executive Officer, Mr. Lim Eng Siang, said in the release that despite the many changes that the country has experienced over the past few decades, one problem that remains is that the country’s people, especially the younger ones, have expressed a low level of satisfaction that they are able to prepare themselves for the future.
The findings are part of a regional report by Economist Impact entitled “Rethinking Wellbeing in Asia: How Lifestyles Are Changing”, which surveyed 5,000 people in 13 Asian markets, with Malaysia among the least satisfied.
“This report illustrates how we can continue to meet the needs of the next generation of Malaysians as they enter adulthood.”
Economist Impact quoted two experts, Baketh Yusof, director of the Policy and Strategy Unit of the Malaysian Employees Provident Fund Board, and Dr. Norma Mansoo, president of the Malaysian Economic Association and director of the Centre for Social Wellbeing Research at the University of Malaysia, as saying that most members of the workforce have stagnant salaries and that saving is becoming more and more difficult for young people.
Research shows that one of the reasons for this is the mismatch between labor market demand and job seekers’ abilities, as well as challenges in salary structures, especially for the youngest groups in the workforce, said Baketh Yusof.
Norma Manso said that stagnant wages and incomes are contributing to the trend for young people to work abroad, especially those with higher education, because of the higher income opportunities abroad.
The study emphasized that more needs to be done to improve the financial literacy of young Malaysians, including raising awareness of riskier financial instruments.
Lim said it is equally important to actively communicate the benefits of income protection and the future stability that good health can bring, which will help to address the future financial stability issues faced by young Malaysians.
“Financial empowerment needs to start at a young age and include ongoing lifelong learning as individuals grow and move through the different stages of life; at Prudential Insurance, our Corporate Social Responsibility (CSR) program is working towards this agenda.”
He cited the company’s financial education programs, Cha-Ching, Money Right, and Adult Financial Education (AFE), which are appropriate for ages seven through adulthood, and PRUKasih Aman, a microinsurance solution for low-income communities that helps people access the benefits and protections that come with insurance programs.
