The Ministry of Human Resources has confirmed that it is currently studying a proposal to raise the mandatory retirement age in Malaysia from 60 to 65 years.
Mandatory or Minimum Retirement Age
Currently, the mandatory or compulsory retirement age for civil servants (who are appointed on or after 1 January 2012) in Malaysia is 60.
1 For private sector employees, their retirement age is in accordance with the terms of their employment but subject to the minimum age of 60, pursuant to the Minimum Retirement Age Act 2012.
2
While it has been reported that the proposal is for raising the ‘mandatory’ retirement age, it is likely that the proposal is for raising both the
mandatory retirement age for civil servants and the
minimum retirement age for private sector servants, from 60 to 65 years of age.
Comments
The proposal to raise the mandatory retirement age from 60 to 65 was recently made by Datuk Seri Azalina Othman Said, Minister in the Prime Minister’s Department (Law and Institutional Reform). Speaking in her personal capacity, she said that it would be a loss for individuals to retire at 60 when they were still energetic, productive and capable of contributing to the workforce
.3
The Human Resources Minister, Steven Sim Chee Keong, said that the matter is being examined by a special committee led by the Ministry’s Deputy Secretary-General (Policy and International), Dr Mohd Shaharin Umar. He also said, “
This committee will look at the suitability of raising the retirement age as there are pros and cons, along with certain challenges.”4 He also added that the Ministry is engaging with relevant stakeholders from the public sector, employee groups, and employers to assess the feasibility and implications of the proposed change.
For private sector employees, if implemented, this would be the first amendment to the Minimum Retirement Age Act 2012 in over a decade, and it would align Malaysia with global trends in managing an ageing population and workforce participation. On the other hand, the proposed amendment will reduce business flexibility and businesses may face an increased challenge in managing workforce transitions or refreshing talent.
At this juncture, there is no specific timeline for the proposal which remains under review and subject to further consultation and evaluation.
Alert by Foo Siew Li (Partner) and Eunice Soo (Associate) of the Employment and Immigration Practice of Skrine.