By Danial Dzulkifly
SHAH ALAM, May 29 — A proposal to raise Malaysia’s mandatory retirement age to 65 has sparked renewed debate over the country’s readiness for an ageing population, drawing mixed reactions from economists and policy experts.
While the move could help retain skilled talent and institutional knowledge, they warned that it may also hinder job opportunities and career advancement for younger workers, who are already facing a competitive labour market.
While it is not yet government policy, the proposal by Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said has reignited discussions over long-term labour sustainability, economic equity, and retirement security.
Malaysia’s current minimum retirement age of 60, set under the Minimum Retirement Age Act 2012, allows for contractual extensions. Yet Azalina’s remarks may signal the start of broader institutional reform, especially in the civil service and judicial tenure.
Retaining experience, easing pension pressure
Economist Samirul Ariff Othman said the proposal reflects shifting demographic realities and aligns with global trends, as nations confront longer life expectancies, fiscal pressures, and shrinking labour pools.
“Delaying retirement can help ease the growing burden of a smaller active workforce supporting an expanding retiree population.
“Raising the retirement age to 65 also aligns with global trends, with many European countries and those under the Organisation for Economic Co-operation and Development (OECD) either raising or reassessing retirement thresholds in response to similar pressures,” he told Media Selangor.
Prolonging employment could also help with pension sustainability, especially given that nearly half of Employment Provident Fund (EPF) contributors approaching retirement have less than RM50,000 in their accounts.
However, Samirul cautioned that not all sectors are suited for older workers, particularly in physically demanding jobs and fast-changing industries where upskilling is essential.
He added that without targeted support, older employees risk being left behind.
Universiti Teknologi Mara’s Prof Tan Peck Leong echoed this view, saying the proposal to increase the retirement age must be matched with systemic reforms.
“While Malaysians are generally living longer, with life expectancy now at 76.9 years according to a 2024 study by research platform Macrotrends, healthy ageing and employability remain two distinct challenges.
“Older workers face higher risks of non-communicable diseases, and many are inadequately equipped for today’s rapidly evolving, tech-driven job market,” he said.
While older adults are increasingly willing to remain active economically, as seen by the 13 per cent rise in job applications from those aged 60 and above last year, there are limited structured upskilling programmes for them.
“Without supportive policies, such as phased retirement, flexible working arrangements, and intergenerational workforce planning, there is a risk of stagnation in career progression, particularly in the public sector, where promotion pathways tend to be more rigid,” Tan said.
Youth employment and systemic impact
Regarding youth employment, he noted that international data indicate that retaining older workers does not automatically lead to reduced youth hiring, provided there is strategic intergenerational planning and flexible workforce structures in place.
For Malaysia University of Science and Technology’s Prof Emeritus Barjoyai Bardai, extending retirement age allows retirees to continue earning and reduces dependency on government aid.
“Sixty is still relatively young. In fact, according to the United Nations, people up to 60 years old are considered part of the youth group. They have 20 more productive years,” he said.
Retaining older professionals, particularly in fields such as education, healthcare, and the civil service, helps preserve expertise and supports national development.
However, Barjoyai warned that rigid full-time employment models may not suit all older workers, as some face health issues or declining productivity.
“If we retain them under the same terms and salaries, we may not get the output to justify the cost. That is why we must allow fractional employment, remote work, and flexible hours,” he said.
Barjoyai also expressed concerns that delaying retirement could block promotion pathways and limit opportunities for young graduates to advance up the career ladder, especially in the public sector, where vacancies are already limited.
