KUALA LUMPUR, Nov 3 — A proposal to raise Malaysia’s retirement age from 60 to 65 has ignited a national debate, pitting the urgent need to support an ageing population against fears of stifling opportunities for the younger generation.
Proponents argue that with rising life expectancy, extending work life is a crucial step toward financial security.
Critics, however, warn it could block pathways for young graduates entering a competitive job market.
Empty nest eggs
The most compelling argument for raising the retirement age is the precarious financial state of many older Malaysians. Experts point to insufficient retirement savings as a looming crisis.
“Our own centre’s data shows that a large percentage of Malaysians above 60 are still working, but informally.
“That shows the majority do not have enough savings to retire,” said Professor Emeritus Datuk Norma Mansor, director of the Universiti Malaya Social Wellbeing Research Centre.
She also cited the Employees Provident Fund’s (EPF) equally alarming data, which showed that 6.3 million contributors under 55 have less than RM10,000 in retirement savings.
“This group faces financial challenges if they cannot continue working,” she said, highlighting a study in which four in 10 respondents said they relied on supplementary income from their children.
Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai agreed, noting that allowing people to work longer provides additional years to contribute to EPF, improving post-retirement stability.
Beyond individual savings, retaining older workers benefits the economy.
Professor Emeritus Mohd Nazari Ismail from UM’s Faculty of Business and Economics said it helps counteract a declining labour force participation rate, while Soh added that it preserves institutional knowledge and enhances productivity.
Later retirement could stall youth careers
The primary concern is the potential bottleneck it could create for youth employment.
The youth unemployment rate currently sits around 10.2 per cent as of mid-2025, marginally down from previous months but still elevated compared to the overall national unemployment rate of about 3.0 per cent.
“Older workers might restrict job opportunities for young job seekers,” warned Mohd Nazari.
“Younger employees may face fewer promotion opportunities. If the economy expands, this issue may be less severe, but economic stagnation could exacerbate youth unemployment.”
Soh echoed these sentiments, noting that with over 300,000 graduates entering the workforce annually, retaining senior employees could delay promotions and limit entry-level roles, particularly in the public sector and large corporations.
Furthermore, businesses could face higher operational expenses.
“If older employees are not healthy, employers may face higher healthcare costs,” Mohd Nazari explained, adding that retraining them for new technologies would also increase expenses.
Soh also argued that a higher retirement age in the public sector could increase the government’s long-term financial obligations in wages, pensions, and healthcare.
Finding a middle ground
Rather than a blanket mandate, the experts all called for a phased, flexible, and well-supported implementation.
In particular, Norma cautioned against an abrupt increase.
“A gradual rise would allow industries to adjust,” she suggested, recommending an initial move to 62 before further adjustments.
Soh stressed that any extension must be paired with “forward-looking labour market policies.”
He advocated for a voluntary re-employment system beyond age 60, structured succession planning, and expanded access to upskilling programmes to foster intergenerational collaboration.
“In this way, Malaysia can ensure that raising the retirement age complements, rather than competes with, the nation’s broader goals of inclusive growth and sustainable employment for all generations,” he said.
Ultimately, Norma challenged the notion of direct competition, arguing that an intergenerational workforce creates unique value.
“The older workers bring in different knowledge and expertise, which cannot be compared to the younger staff,” she concluded.
“Having senior employees can, in fact, be beneficial to the company and complement the younger workforce.”
