Prime Minister’s Office (PMO) senior director of economics and finance Nurhisham Hussein told a BBC Radio 4 show that the country’s retirement system has “a lot of gaps”, and for many Malaysians, their children are their “retirement plans”.

The former EPF chief strategy officer noted that as family sizes in Malaysia were getting smaller, there were fewer working adults supporting those who have retired.

“We have a number of reforms that we are looking at, but I won’t say it’s something that can be done very quickly,” said Nurhisham.

“We still need to get public support for it, and a full-scale national pension is off the cards.

“It’s not something we can afford,” he said without elaborating on the cost of such a scheme.

Nurhisham, who was speaking on BBC Radio 4’s Crossing Continents programme titled “Ageing without a safety net in Malaysia”, replied in the affirmative when the interviewer asked him whether he was referring to a universal pension scheme.

A universal pension scheme – which is in place in countries such as the Netherlands, New Zealand and Sweden – guarantees that all citizens receive a minimum income upon reaching retirement age.

The scheme, which is funded by revenue from taxation, has previously been suggested as a remedy to counter low EPF savings among Malaysians.

However, Nurhisham said the country’s relatively low tax levels were hindering its ability to fund such a plan.

“Culturally, we have never been a country where there is a tradition of sacrifice for the community,” he said.

“You will find that levels of taxation here are relatively low. So, the ability to get the resources to fund a universal pension (plan) is very limited.”

Last November, Prime Minister Anwar Ibrahim said a total of 6.3 million EPF members, or 48% of those under the age of 55, have less than RM10,000 in their retirement savings with the provident fund. The sum amounts to less than RM42 per month over a period of 20 years.

In June 2023, deputy economy minister Hanifah Hajar Taib told the Dewan Rakyat that the government would consider a universal pension scheme as part of a blueprint it was preparing for the country’s transition to an ageing nation by 2030.

Hanifah was responding to Putrajaya MP Radzi Jidin, who asked about the government’s long-term plan to address the challenges Malaysia would be facing as it moves towards becoming an ageing nation.

The United Nations projects that Malaysia will become an ageing nation by 2030, when 15% of its population will be aged 60 and over.