Forecasting the Retirement Period of Employees in Malaysia 2001-2047

• Published in: SAINS MALAYSIANA
• Main Authors: Ramli, Suraya Fadilah; Ismail, Noriszura; Isa, Zaidi; Kamaruddin, Halim Shukri
• Format: Article
• Language: Malay
• Published: UNIV KEBANGSAAN MALAYSIA, FAC SCIENCE & TECHNOLOGY 2024
• Subjects: Science & Technology - Other Topics
• Online Access: https://www-webofscience-com.uitm.idm.oclc.org/wos/woscc/full-record/WOS:001325517800008

This study forecasts the labor force participation rates in Malaysia by applying stochastic models with cohort effects, which is a method that offers a fresh perspective compared to the traditional age group analyses. The forecasted rates are then applied to estimate the expected retirement period for workers aged 20 years old. Specifically, critical trends among the Malaysian males and females rates, with the projections extending to year 2047, were obtained by leveraging the Renshaw-Haberman and Plat models. Our findings show a decline in the forecasted male labor force participation rate from year 2018 to year 2047, while for female participation, the rate increases sharply in the early period before showing a decrease at the end of the forecast period. The expected length of retirement for both genders exhibits an increase, with female retirees experiencing a substantial extension, from 6 years in year 2001 to over 12 years in year 2047. This study uncovers the need for pension reform in Malaysia, as the existing system may fall short in accommodating the lengthening retirement periods due to improved mortality rates and shifting workforce participation. The findings on age-specific and cohort effects for the labor force participation rates show the necessity for an adaptive pension policies that can respond to an aging population and shifting labor force.