Malaysia's pension system : performance and strategies for improvement

Abstract

Population ageing and economic uncertainties made many question the extent to which current pension systems are able to provide adequate pension savings that can at least maintain standards of living during the retirement period. Much focus on pension issues and challenges has centred on developed nations rather than developing countries. In general, the framework of pension systems in developed countries are expected to be different in terms of policy and regulation than pension system practices in developing countries. As a project largely contributing to the literature for developing countries, this thesis seeks to explore the performance of the Malaysian pension system and investment strategy of Malaysia's defined contribution pension scheme known as the Employees Provident Fund (EPF). This thesis is composed of three parts. The first part of this thesis explores the development and evolution of pension system in both developed and developing countries as well as analysing the performance and experiences in both nations. The second part of this thesis presents the performance of a pension system, primarily for the EPF. Finally, this thesis extends the investment analysis through analysing the impact of alternative assets on the EPF's strategy. The significant of this study are: i) based on lesson from others country's experiences, this thesis provides a comprehensive documentation analysis that gives a greater understanding of Malaysia's pension system performance and future directions of the system towards preparing the nation for the ageing population; ii) with different policies and regulations from other country practices, this study develops the investment model methodologically tailored to the EPF case. iii) we extend a well-established TSP study for the EPF done by Hussin (2012) considering alternative international assets for the EPF context. Here, we provide new evidence of optimal investment strategy for the EPF after taking into account international diversification.

Date of Award	2018
Original language	English