Ageing Workforce 2006 Report. Malaysia

Transcription

1 Ageing Workforce 2006 Report TM Malaysia W W W. W A T S O N W Y A T T. C O M

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3 Dear Colleague: AGEING WORKFORCE 2006 is one of the largest ever pan-asia Pacific studies focusing on corporations strategic understanding and future outlook on healthcare and retirement benefits provisions. This research is conducted against the backdrop of an ageing population in the Asia-Pacific region. According to the U.S. Census Bureau, in 2000, the population aged 50 and above accounted for 17.2% of the total population in 12 major Asia-Pacific areas (Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, Taiwan, and Thailand). This percentage will increase to 31.4% in 2030 and 38.7% in For Malaysia, the percentage is 13.2%, 22.9%, and 29.7% in 2000, 2030, and 2050 respectively, below the average of the 12 major Asia-Pacific areas. As the ageing population becomes a serious issue for most Asia-Pacific countries in the next few decades, employees' healthcare and retirement needs will increase accordingly. Employers have a vital role in the provision of these benefits through statutory benefits contribution or supplementary benefits schemes. In the fight for talent, the proper design of healthcare and retirement benefits taking into account demographic changes will become vital to attracting and retaining the high-performing employees across all age groups. It is our pleasure to present to you the summary results of AGEING WORKFORCE 2006 for Malaysia. We look forward to sharing more of Watson Wyatt global perspectives on healthcare and retirement issues in the future. We encourage you to contact the Head of Benefits Consulting Practice in our local office, if you are interested in being informed and included in such discussion seminars. Yours Sincerely, Doreen Thang, PhD Director, Asia-Pacific Research and Innovation Centre Watson Wyatt Worldwide Doreen.Thang@WatsonWyatt.com Tel: (+65) Ho Chee Seng, FSA ASEAN Practice Leader, Benefits Consulting Watson Wyatt Worldwide Chee.Seng.Ho@WatsonWyatt.com Tel: (+603)

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5 Table of Contents Table of Contents Overview 1 Survey Summary About Ageing Workforce Section 1: Company s Healthcare Benefits Provision...7 Section 2: Company s Retirement Benefits Provision..12 Section 3: Impact of Demographic Changes on Company Section 4: Company s Views on Sickness Absence.. 25 Section 5: Malaysia Country-Specific Questions....28

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7 Malaysia Overview Ageing Workforce 2006 Malaysia Overview Malaysia s workforce is ageing steadily. Based on projections by the U.S. Census Bureau, 29.7 % of the entire population in Malaysia will be aged 50 and above by In 2000, this figure was only 13.2% of the entire population. In absolute terms, the number of people aged 50 and above will increase from 2.9 million in 2000 to more than 12 million by (To put these numbers in context, Malaysia s entire workforce stood at about 10.6 million in 2004). This fundamental change in Malaysia s demographics will have far-reaching consequences for the economy and companies operating in that country. As the Malaysian workforce ages, employers will find a need to hire older workers and to keep them in the workforce longer, as long as they remain productive. As a result, healthcare and retirement needs are anticipated to increase. Nevertheless, this can also lead to retirement and healthcare benefits being instrumental tools used by employers to successfully attract and retain more qualified and competent employees. Admittedly, the rate of ageing in Malaysia is not as rapid as those of other Asia Pacific countries like China, Hong Kong, Singapore and Thailand. Indeed, it is often perceived that given Malaysia s relatively slower rate of ageing, corporate decision-makers need not deal with the problem of an ageing workforce for the foreseeable future. Yet, this perception overlooks the fact that income from statutory retirement benefits schemes may be inadequate for employees to maintain a basic standard of living after retirement, and that statutory healthcare benefits may be insufficient to meet employees basic healthcare needs. Currently, statutory retirement benefits in Malaysia are provided for via the Employees Provident Fund (EPF), and contribution rates are set at 12% for the employer and 11% for the employee. It is also fairly common for some large companies in Malaysia to supplement the EPF with company-sponsored benefits schemes. Ageing Workforce TM 2006, Malaysia 1

8 Malaysia Overview To address the problem of the ageing workforce, the Malaysian government is already looking into measures to enhance the existing statutory healthcare and retirement system. As shown later in this overview, these measures are all intended to protect and enhance the savings of EPF members. Still, it is foreseeable that the role of the company as a provider of supplementary retirement and healthcare benefits will become more important as the workforce ages steadily in the next 15 to 20 years. But the ageing of the Malaysian workforce may also present an opportunity for employers. In fact, research by Watson Wyatt strongly suggests that a well-designed retirement and healthcare scheme will greatly enhance the ability of companies in Malaysia to attract and retain the most qualified and competent employees. As competition for global talent intensifies amongst companies, a well-designed healthcare and retirement benefits scheme that takes into account demographic changes will be crucial to ensuring corporate survival and profitability. An Ageing Workforce and Retirement Benefits Provision The phenomenon of an ageing population is observed in many developed and developing countries, and the underlying causes are similar; they are: an elongated life expectancy rate and a declining birth rate. The Asia-Pacific region, in particular, is ageing and Malaysia is no exception. In Malaysia, life expectancy at birth was only 67.7 years in 1990 but this number is expected to increase to 80.7 years by On the other hand, the birth rate will decline from 29 babies per thousand in 1992 to only 15 babies per thousand by 2050 (U.S. Census Bureau). Currently, financial security in old age is provided for via the Employees Provident Fund (EPF). In addition, company-sponsored supplementary retirement plans offered by large local and multinational companies in Malaysia have also witnessed an increase in recent years. Broadly speaking, the EPF provision protects the Malaysian worker against financial insecurity in retirement by mandating regular contributions from the employer and the employee into a retirement fund for the employee. Nonetheless, in the recent years, the EPF retirement scheme covers only about half of the entire workforce. It has also been found that retirees often deplete their EPF savings within the first 3 years of retirement. To better address the needs of an ageing workforce, the government is examining measures to enhance the EPF system. These measures include: Limiting pre-retirement withdrawals; for example to purchase housing. Ageing Workforce TM 2006, Malaysia 2

9 Malaysia Overview Offering alternatives to the lump sum payment on retirement; for example by offering an annuity. Establishing long term contribution rates instead of allowing contribution rates to be used as a tool for economic development. Permitting EPF savings to be invested in new investment products to enhance investment returns and diversify risk. Authorising EPF to offer financial advisory services and education to EPF members. With the federal government working to reduce the fiscal deficit, it is also conceivable that the government will call for a greater role from employers in the provision of retirement benefits. Ultimately, the principal goal of the government is to obligate employers to commit savings on a long term basis in order to pay retirement benefits to employees as the workforce ages steadily. Given these factors, it is foreseeable that an ageing workforce in Malaysia will drive demand for additional retirement and healthcare benefits. Therefore, it makes good business sense for employers to implement strategies immediately to manage an ageing workforce and use this opportunity to enhance their own companies competitiveness. An Ageing Workforce and Healthcare Benefits Provision Besides the need for a better retirement benefits system, the ageing workforce in Malaysia will also bring to light another problem that of rapidly rising healthcare costs. According to the World Health Organization, Malaysians have experienced drastic improvements in mortality and health characteristics in the last decade. In addition, the quality of healthcare has also improved significantly. Nevertheless, these improvements have come at a high price as observed in the rapid increase in the Total Health Expenditure per capita. Indeed, Total Health Expenditure per capita increased by more than 71% between 1998 and 2004 (World Health Organization). Currently, the portion of Malaysia s GDP that is devoted to healthcare is slightly below 4%. Still, this is below the 6% recommended by the WHO, and significantly lower than the 7 to 10 percent of more developed economies. In another words, healthcare spending in Malaysia is likely to rise to meet the healthcare needs of the ageing population. In addition to the escalating healthcare cost, Malaysians also suffer from a growing incidence of chronic health conditions, attributed to a change in lifestyle habits and ageing. Chronic health conditions are health problems that require costly treatment over an extended period of time, and Ageing Workforce TM 2006, Malaysia 3

10 Malaysia Overview as such, seriously test the efficiency of any healthcare system. Moreover, chronic health conditions often gravely curtail the economic and productive activities of the sufferers. Admittedly, Malaysians enjoy much better healthcare today than a decade ago. However, the sustainability of the healthcare system in light of mounting healthcare expenditure and emerging diseases must be addressed. Healthcare benefits are generally provided for by companies in Malaysia. The government does not provide any healthcare benefits to the general public other than funding from individual EPF accounts. Indeed, the balance in Account 3 is available for withdrawal toward payment of medical expenses. Recommended Strategies for Employers The ageing problem in Malaysia could be significant. But Malaysia still possesses advantages that many countries do not have. It offers a competitive wage structure and a business environment that is conducive to businesses and investment. This suggests that Malaysia can remain competitive even as the country completes the transition to an aged society. For companies in Malaysia, this is also a window of opportunity for them to implement strategies that mitigate the effects of an ageing workforce and enhance their own competitiveness at the same time. As global competition intensifies and Malaysia continues to industrialise and move towards a developed nation status, the demand for workers with specialised skill sets will increase. Indeed, companies in Malaysia can enhance their own competitiveness by attracting and retaining the most qualified and competent employees with a well-designed supplementary retirement and healthcare benefits scheme. In fact, research by Watson Wyatt shows that offering a welldesigned supplementary retirement and healthcare benefits scheme can be a strong incentive for employees, whilst taking into account cost considerations. In addition, companies have at their disposal, a number of strategies to address the healthcare and retirement needs brought about by an ageing workforce. Survey results by Watson Wyatt show that setting up supplementary benefits plans for employees and, increasing company statutory contributions are the top two actions companies prefer to take to address the increased retirement and healthcare benefit needs brought about by an ageing population. Other corporate strategies include: sharing the cost of benefits provision with employees, helping employees to effectively manage their retirement funds through the provision of better investment knowledge, Ageing Workforce TM 2006, Malaysia 4

11 Malaysia Overview rebalancing of the Cash versus Benefits compensation components, and introducing incentives for employees to stay healthy, to name but a few. Ultimately, companies can no longer afford to view retirement and healthcare benefits provision as optional. As competition for global talent intensifies amongst companies, well-designed healthcare and retirement benefits schemes that take into account demographic changes will be more effective in ensuring long-term corporate profitability. Ageing Workforce TM 2006, Malaysia 5

12 Survey Summary for Malaysia Survey Summary for Malaysia Unlike most other Asia-Pacific countries which are experiencing ageing population problems, 55% of the surveyed employers in Malaysia think that population increase is the most significant demographic change over the next years. Most employers think that employees appreciation of healthcare and retirement benefits will increase over the next years even with such demographic changes. From the employers perspective, out of the employee benefit programme components surveyed, supplementary retirement (57%) and healthcare benefits (54%) are the two benefits most valued by employees compared to the rest. With this in mind, the design of cost effective healthcare and retirement benefit schemes should play an important role in attracting and retaining high-performing employees in the near future. A: Impact of Demographic Changes 1) 55% of employers believe that population increase will be the most significant demographic change, followed by 33% who believe that ageing population the more significant demographic change. 50% believe that such demographic changes will have a serious impact on the society and economy over the next years. 2) For those employers (33%) who chose ageing population as the most significant demographic change over the next years, 44% of them have thoughts of setting up/increasing supplementary benefits plans, while 31% have thoughts of increasing company s statutory contributions. In addition, 64% of these companies believe that employees would need to share the cost with them. B: Healthcare Benefits Issues 1) Complying with statutory healthcare benefits regulation (68%) and "Managing to specific and predetermined cost target" (48%) are the two most significant factors cited by most employers to shape the company s healthcare benefit strategy, while the particular demographics of your workforce is cited by the least number of companies (16%) as a factor. 2) Most companies (72%) think that healthcare cost affects their business earnings more significantly now than 3 years ago to at least some extent. However, only 10% of employers think that employees need to bear the cost of future healthcare cost. 3) 66% of the companies provide supplementary healthcare benefits to their employees. These supplementary healthcare benefits vary across employees by management level for 82% of the companies. 4) A moderate percent of these employers believe that their supplementary healthcare benefits help to attract (34%) and retain (31%) high-performing employees. Less than half of the employers claim that they have an effective healthcare communication system. Brochures/written material are most commonly used for supplementary healthcare benefits communication by employers (51%). 5) To control healthcare costs, the 3 most cited actions likely to be taken by companies are: a) Claimant paid excess over and above a certain prescribed level (39%); b) Network or restricted hospital list (28%); and c) Co-insurance and cost sharing with employees (23%). C: Retirement Benefits Issues 1) 28% of the employers are of the view that the company has an obligation to help employees save enough in their retirement accounts. As to the investment risk of retirement funds, only 37% of them think the employees should bear all the investment return risk. 2) 75% of employers think that income from statutory retirement scheme is inadequate. Nonetheless, only 37% of employers provide supplementary retirement benefits to employees. Most of these supplementary retirement benefits are top-up contribution through Employee Provident Fund (EPF) to individual account (63%). In addition, 56% of these companies have retirement benefits varying across employees by management level. 3) More employers believe that their supplementary retirement benefits are better motivators to attract (41%) and retain (43%) high-performing employees, compared to supplementary healthcare benefits. 4) 70% of the supplementary retirement benefits schemes are Defined Contribution (DC), while Defined Benefits (DB) accounts for 29%. And none of companies are taking actions to change their current schemes to a DC scheme. Ageing Workforce TM 2006, Malaysia 6

13 Company s Healthcare Benefits Provision ABOUT AGEING WORKFORCE 2006 This study focuses on strategic issues and future outlook about company healthcare and retirement benefits against the backdrop of an ageing population in the Asia-Pacific region. We interviewed key decision-makers or advisors on company benefits policy from large local companies and MNCs in each participating country. In Malaysia, 223 out of Top 2000 companies, ranked by revenue, with minimum 100 full-time employees participated in this survey. 33% of these companies are foreign companies. These participating companies constitute a representative sample across all major industries. TRANSPORT, STORAGE & LOGISTICS 4% OTHER SERVICES 2% WHOLESALE & RETAIL TRADE 22% MINERALS & NATURAL RESOURCES 6% Other 0% BUSINESS & PROFESSIONAL SERVICES 4% MANUFACTURING 32% CONSTRUCTION / REAL ESTATE & ENGINEERING 7% FINANCE 18% INFORMATION, MASS MEDIA & COMMUNICATIONS 2% LEISURE & ENTERTAINMENT 3% Note: For the results of some questions in this report, the sum of percentages for all choices is not equal to 100% because of rounding. Section 1: Company s Healthcare Benefits Provision 1. To what extent do you think that healthcare costs affect your business earnings more significantly now than 3 years ago? To A Very Great Extent / To A Great Extent 30% To Some Extent 42% To A Very Little Extent / Not At All 28% 2. To what extent do you think that employees should bear the full cost of future healthcare cost increases? To A Very Great Extent / To A Great Extent 10% To Some Extent 36% To A Very Little Extent / Not At All 55% Ageing Workforce TM 2006, Malaysia 7

14 Company s Healthcare Benefits Provision 3. To what extent do you think that statutory healthcare benefits are sufficient for employees basic healthcare expenditures? To A Very Great Extent / To A Great Extent 25% To Some Extent 42% To A Very Little Extent / Not At All 33% 4. What factors most significantly shape your company s healthcare benefit strategy and planning? (Please tick up to 3 choices only) Complying with statutory healthcare benefits regulation set by government 68% Managing to specific and predetermined cost targets 48% Competitive market practice benchmarks 39% Complying with my company s global benefits practice 21% Best practice benchmark 19% The particular demographics of your workforce 16% 5. Does your company offer a supplementary healthcare benefits scheme? No No 34% Yes Yes 66% Ageing Workforce TM 2006, Malaysia 8

15 Company s Healthcare Benefits Provision 6. Is your company planning to set up/increase supplementary healthcare benefits in the next 5 years? Yes, we are in the process of implementation 16% Yes, we are in the process of discussion 19% Not sure, we are waiting for more information 34% No, we have decided not to proceed after we thought of it 7% No, we have not thought of it at all 25% Questions 6A-10 are only answered by companies with Supplementary Healthcare Benefits. 6A. Which employee categories do your company s supplementary healthcare benefits apply to? (Please choose all those relevant choices that most properly describe your supplementary healthcare benefits system) All full-time employees 88% Dependants of full-time employees included as well Full-time employees from certain management level 14% 14% New full-time employees 12% All full-time employees with certain years service with company Existing full-time employees who joined the company before certain date in the past 5% 10% Ageing Workforce TM 2006, Malaysia 9

16 Company s Healthcare Benefits Provision 7. To what extent do you think that your supplementary healthcare benefits help your company attract excellent job applicants? To A Very Great Extent / To A Great Extent 34% To Some Extent 43% To A Very Little Extent / Not At All 23% 8. To what extent do you think that your supplementary healthcare benefits help your company retain high-performing employees? To A Very Great Extent / To A Great Extent 31% To Some Extent 39% To A Very Little Extent / Not At All 31% 9. To what extent do you think that your company has an effective healthcare communication system in place? To A Very Great Extent / To A Great Extent 46% To Some Extent 41% To A Very Little Extent / Not At All 13% Ageing Workforce TM 2006, Malaysia 10

17 Company s Healthcare Benefits Provision 10. In order to control costs, which of the following actions are most likely to be taken by your company in the next 5 years? (Please tick up to 3 most likely options) Claimant paid excess over and above a certain prescribed level 39% Network or restricted hospital list 28% Co-insurance/cost sharing on claims 23% Reduced or capped benefits 18% Exclude pre-existing medical conditions from cover 16% Exclude dependents 9% No action will be taken 7% Ageing Workforce TM 2006, Malaysia 11

18 Company s Retirement Benefits Provision Section 2: Company s Retirement Benefits Provision 11. Which of the following company benefits do you think would be highly valued by your employees? (Please select up to 3 choices) Supplementary retirement benefits 57% Supplementary healthcare benefits 54% Financial protection benefits (life/disability insurance, etc) 42% Post-retirement healthcare benefits 24% Longer annual leave Benefits for immediate consumption (such as health club membership, cars, etc) 13% 20% 12. To what extent do you think your company has an obligation to help employees save enough in their retirement accounts to maintain a reasonable standard of living after retirement? To A Very Great Extent / To A Great Extent 28% To Some Extent 43% To A Very Little Extent / Not At All 29% Ageing Workforce TM 2006, Malaysia 12

19 Company s Retirement Benefits Provision 13. To what extent do you think that income from statutory retirement benefit scheme is adequate for employees to maintain the basic standard of living after retirement, if it is the only source of income? To A Very Great Extent / To A Great Extent 25% To Some Extent 42% To A Very Little Extent / Not At All 33% 14. To what extent do you think that employees should bear all the investment return risk in their retirement funds? To A Very Great Extent / To A Great Extent 37% To Some Extent 37% To A Very Little Extent / Not At All 27% 15. What kind of actions has your company taken to help employees make the right investment choices for your employees retirement fund? (Please tick all that apply) None 57% Face-to-face training seminars 23% Brochures/written material 18% Provide access to financial planners 15% On-line learning and information system 9% Telephone hotline 4% Ageing Workforce TM 2006, Malaysia 13

20 Company s Retirement Benefits Provision 16. What factors most significantly shape your company s retirement benefit strategy and planning? (Please tick up to 3 choices only) Complying with statutory retirement benefit provision required by government regulations 74% Managing to specific and predetermined cost targets 39% Competitive market practice benchmarks 30% Complying with my company s global benefits practice 17% Best practice benchmark 13% The particular demographics of your workforce 9% Control/reduce the risk of pension liabilities 5% 17. Does your company offer supplementary retirement benefits? Yes No Yes, 37% No, 63% Ageing Workforce TM 2006, Malaysia 14

21 Company s Retirement Benefits Provision 18. Is your company planning to set up/increase supplementary retirement benefits in the next 5 years? Yes, we are in the process of implementation 9% Yes, we are in the process of discussion 6% Not sure, we are waiting for more information 34% No, we have decided not to proceed after we thought of it 10% No, we have not thought of it at all 41% Questions 18A-25 are only answered by companies with supplementary retirement benefits. 18A. Which employee categories do your company s supplementary retirement benefits apply to? (Please choose all those relevant choices that most properly describe your supplementary retirement benefits system) All full-time employees 67% All full-time employees with certain years service with company 24% Full-time employees from certain management level 18% New full-time employees 9% Existing full-time employees who joined the company before certain date in the past 9% Ageing Workforce TM 2006, Malaysia 15

22 Company s Retirement Benefits Provision 19. How is the supplementary retirement benefit paid to the employees? Lump sum Mix of both, 5% Income stream Mix of both Income stream, 2% Lump sum, 93% 20. To what extent do you think that your supplementary retirement scheme helps your company attract high quality job applicants? To A Very Great Extent / To A Great Extent 41% To Some Extent 39% To A Very Little Extent / Not At All 20% 21. To what extent do you think that your supplementary retirement scheme helps your company retain the high-performing employees? To A Very Great Extent / To A Great Extent 43% To Some Extent 30% To A Very Little Extent / Not At All 27% Ageing Workforce TM 2006, Malaysia 16

23 Company s Retirement Benefits Provision 22. To what extent do you think that your company has an effective retirement benefit communication system in place? To A Very Great Extent / To A Great Extent 38% To Some Extent 41% To A Very Little Extent / Not At All 22% 23. What type of supplementary retirement scheme does your company provide to employees? Hybrid retirement benefit, 1% Defined Benefit (DB), 29% Defined Benefit (DB) Defined Contribution (DC) Hybrid retirement benefit Defined Contribution (DC), 70% Ageing Workforce TM 2006, Malaysia 17

24 Company s Retirement Benefits Provision 24. Are you considering changing your current scheme to a DC scheme in the next 5 years? Yes, we already have an implementation plan 0% Yes, we are in the process of discussion 0% Not decided yet 28% No, we will keep the current scheme 60% Not applicable 12% 25. Are employees required to contribute to a supplementary retirement benefit? Yes, compulsory contribution for employees 11% No, but employees can contribute voluntarily 12% No, employees don t contribute at all 77% Ageing Workforce TM 2006, Malaysia 18

25 Impact of Demographic Changes on Company Section 3: Impact of Demographic Changes on Company 26. What will be the most significant demographic change in your country over the next years? (Please tick one only) Population decrease, 9% Others, 3% Ageing population Population increase Population decrease Others Ageing population, 33% Population increase, 55% 27. To what extent do you think that the demographic changes will have serious impact on the society and economy in your country over the next years? To A Very Great Extent / To A Great Extent 50% To Some Extent 44% To A Very Little Extent / Not At All 6% Ageing Workforce TM 2006, Malaysia 19

26 Impact of Demographic Changes on Company 28. To what extent do you think that your company is fully aware of the impact of demographic changes on your company s business? To A Very Great Extent / To A Great Extent 55% To Some Extent 35% To A Very Little Extent / Not At All 9% 29. To what extent do you think that employees appreciation of healthcare benefits will increase over the next years? To A Very Great Extent / To A Great Extent 68% To Some Extent 30% To A Very Little Extent / Not At All 1% 30. To what extent do you think that employee s appreciation of retirement benefits will increase over the next years? To A Very Great Extent / To A Great Extent 58% To Some Extent 36% To A Very Little Extent / Not At All 6% Ageing Workforce TM 2006, Malaysia 20

27 Impact of Demographic Changes on Company 31. Do you think that there will be a reduction in the supply of labor due to the demographic changes? Don't know, 10% Yes No Don't know Yes, 40% No, 50% 32. How do you think your society will respond to the reduction in the labor supply? (Please select up to 3 most possible choices) Training/development of the labor force to increase productivity 74% Adopt technology to replace labor 57% Later retirement to lengthen working phase Import labor force from overseas Increase workforce participation rate 26% 24% 33% Move work offshore 15% Encourage immigration 6% Ageing Workforce TM 2006, Malaysia 21

28 Impact of Demographic Changes on Company 33. What kind of government statutory benefits do you think will have to change to address the demographic changes? (Please select up to 3 most important choices) Healthcare benefits 70% Retirement benefits 57% Elderly care (long term nursing care) Child care Housing benefits Unemployment benefits 25% 18% 15% 12% Nothing needs to be changed 4% 34. What changes do you think your company will have to make to the following benefits programmes to address the demographic changes over the next 5 to 10 years? Introduction of new benefits Retirement Benefits 24% 32% 43% 0% 0% Increase of existing benefits No change Reduction of existing benefits Removal of existing benefits Healthcare benefits 17% 55% 27% 0% 0% Post-retirement Healthcare Benefits 22% 15% 60% 1% 1% Ageing Workforce TM 2006, Malaysia 22

29 Impact of Demographic Changes on Company 35. Other than government tax incentives, what will be the other significant drivers for your company to increase the benefits provisions for your employees? (Please choose up to 3 most important choices) Changes of government legislation 57% Employer s response to the changing needs of their employees 41% Competitors benefit provisions 27% Employee s demand for changes to benefits provisions 20% Questions are only answered by companies choosing Ageing Population as the most significant demographic changes in your country over the next years. 36. Statutory healthcare system will be unsustainable as ageing population becomes more serious in the future? To A Very Great Extent / To A Great Extent 62% To Some Extent 34% To A Very Little Extent / Not At All 4% 37. Statutory retirement system will be unsustainable as ageing population becomes more serious in the future? To A Very Great Extent / To A Great Extent 60% To Some Extent 32% To A Very Little Extent / Not At All 8% Ageing Workforce TM 2006, Malaysia 23

30 Impact of Demographic Changes on Company 38. In order to address the increased retirement and healthcare benefit needs brought about by an ageing population, which of the following methods does your company prefer? (Please tick one choice only) Increase company statutory contributions 31% Set up supplementary benefits plans for employees Let employees bear the cost of increased needs Increase supplementary benefits plans for employees 20% 16% 28% Others 4% 39. What actions does your company think the employees should take in meeting the increased healthcare and retirement needs? (Choose only one choice) Share the cost with employers 64% Bear the whole cost on their own, e.g., buy personal insurance or have enough savings 24% Work longer than before 11% No action needs to be taken by employees 0% Ageing Workforce TM 2006, Malaysia 24

31 Company s Views on Sickness Absence 40. What actions does your company think the government needs to take in meeting the increased healthcare and retirement benefits needs? (Please select up to 3 most important choices) Provide company with tax incentives to help set up supplementary benefits scheme 68% Pass legislation to encourage supplementary benefits provision 46% Encourage employees to save more 32% Increase employer s contribution to statutory benefit 31% Increase legal retirement age Develop insurance market to provide relevant insurance products 20% 26% Increase employee s contribution to statutory benefit 9% No action needs to be taken by government 5% Others 0% Section 4: Company s Views on Sickness Absence 41. To what extent are you concerned about the rate of sickness absence within your company? A little concerned, 11% Not concerned within acceptable limits, 9% Very concerned Quite concerned A little concerned Not concerned within acceptable limits Very concerned, 46% Quite concerned, 34% Ageing Workforce TM 2006, Malaysia 25

32 Company s Views on Sickness Absence 42. Does your company know the cost of absence to your business? Yes, a strong understanding from our continuous efforts to monitor and measure the cost 55% Yes, we attempt to measure the cost, but our understanding could be improved 36% No, too difficult to assess 9% 43. Are you considering to actively manage the level of short-term sickness absence occurring within your company in near future? Yes, with high priority 37% Yes, when possible 35% Yes, maybe 14% No, not immediately 5% No, not an issue currently 9% Ageing Workforce TM 2006, Malaysia 26

33 Company s Views on Sickness Absence 44. If your company had a choice over the potential methods to control the excessive sickness absence beyond the entitled days of fully-paid sick leave, which of the following methods will your company choose? (Please tick only one choice) No pay for excessive sick leave 61% Reduced pay coverage rather than full pay for excessive sick leave 21% No change will be made 8% Others 6% Terminating services of employee if excessive sick leave has been taken 5% Ageing Workforce TM 2006, Malaysia 27

34 Malaysia Country-Specific Questions Section 5: Malaysia Country-Specific Questions Questions are only answered by companies with supplementary healthcare benefits. 45. How does your company communicate supplementary healthcare benefits with employees? (Please tick all that apply) Brochures/written material 51% Face-to-face training seminars 37% Not Applicable On-line learning and information system 14% 13% Others Provide access to financial planners Telephone hotline 6% 5% 5% 46. Does your company s supplementary healthcare benefits vary across employees from different management level? No, 18% Yes No Yes, 82% Ageing Workforce TM 2006, Malaysia 28

35 Malaysia Country-Specific Questions Questions are only answered by companies with supplementary retirement benefits. 47. How does your company manage your company s supplementary retirement benefits? (Please tick all that apply) Top-up contribution through Employee Provident Fund (EPF) to individual account 63% Book reserve set aside in company 16% Un-provided (Pay as your go) 15% Through fund managed by insurance company 15% Managed by trustee, either internal or external 6% Others 4% 48. Does your company s supplementary retirement benefits vary across employees from different management level? No Yes Yes 56% No 44% Ageing Workforce TM 2006, Malaysia 29

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37 WATSON WYATT ASIA-PACIFIC OFFICES Vice President & Regional Managing Director Dr Chuly Lee ASEAN ASEAN Managing Director Andrew Heard BANGKOK Watson Wyatt (Thailand) Ltd 6/F Gaysorn Place 999 Ploenchit Rd, Pathumwan Bangkok 10330, Thailand Tel: (66) Fax: (66) Manager: Tayat Sriplung JAKARTA PT Watson Wyatt Indonesia Menara DEA Building 2 nd Floor Jl. Mega Kuningan Barat Kav. E.4.3 No. 1 Jakarta 12950, Indonesia Tel: (62) /6 Fax: (62) Manager: Lilis Halim lilis.halim@watsonwyatt.com KUALA LUMPUR Watson Wyatt (Malaysia) Sdn. Bhd. 18/F Menara Uni.Asia 1008 Jalan Sultan Ismail Kuala Lumpur 50250, Malaysia Tel: (60) Fax: (60) Manager: Eustace Gomez eustace.gomez@watsonwyatt.com MANILA Watson Wyatt Philippines, Inc. 21/F Tower 1, The Enterprise Center 6766 Ayala Avenue, Makati City Philippines 1200 The Philippines Tel: (63) Fax: (63) Officer in charge: Rachelle C. Arcebal rachelle.arcebal@watsonwyatt.com SINGAPORE Watson Wyatt Singapore Pte Ltd 9 Raffles Place #17-21 Republic Plaza II Singapore Tel: (65) Fax: (65) Manager: Kwan Chee Wei cheewei.kwan@watsonwyatt.com AUSTRALIA MELBOURNE Watson Wyatt Australia Pty Ltd Level 4, 1 Collins Street Melbourne, Victoria 3000, Australia Tel: (61) Fax: (61) Manager: Andrew Boal andrew.boal@watsonwyatt.com.au SYDNEY Watson Wyatt Australia Pty Ltd Level 14, 60 Margaret Street Sydney, New South Wales 2000, Australia Tel: (61) Fax: (61) Manager: Andrew Boal andrew.boal@watsonwyatt.com.au INDIA BANGALORE Watson Wyatt India Pvt Ltd Prestige Meridian- I Unit 810, 8th Floor M.G. Road Bangalore Tel: (91) Fax: (91) Manager: Anita Belani anita.belani@watsonwyatt.com KOLKATA Watson Wyatt India Pvt Ltd 2 nd Floor, Merlin Links 166B S P Mukherjee Road Kolkata , West Bengal India Tel: (91) Fax: (91) Manager: Liyaquat Khan Liyaquat.khan@watsonwyatt.com MUMBAI Watson Wyatt India Pvt Ltd Solitaire Corporate Park Building No. 5, 1 st Floor Andheri-Kurla Road Andheri (East) Mumbai , India Tel: (91) / Fax: (91) Manager: Anita Belani anita.belani@watsonwyatt.com DELHI (Gurgaon) Watson Wyatt Insurance Consulting Pvt Ltd JMD Regent Square 9th Floor, Mehrauli Gurgaon Road Gurgaon , India Tel: (91) Fax: (91) Manager: Melanie Puri Melanie.puri@watsonwyatt.com NORTH ASIA SEOUL Watson Wyatt Korea 15th Floor, Kyung-Am Building Samsung-Dong, Kangnam-gu Seoul , Korea Tel: (82) Fax: (82) Manager: Gwang Soon Kim GS.Kim@watsonwyatt.com TOKYO Watson Wyatt K.K. Ichigaya Tokyu Bldg. 8F Kudankita, Chiyoda-ku Tokyo Japan Tel: (81) Fax: (81) /7350 Contact webmaster@watsonwyatt.co.jp GREATER CHINA Greater China Managing Consultant Patrick Huang patrick.huang@watsonwyatt.com BEIJING Watson Wyatt Consultancy (Shanghai) Ltd, Beijing Branch 5/F, South Tower, Beijing Kerry Center 1 Guanghua Road, Chaoyang District Beijing , China Tel: (86) /2/3 Fax: (86) General Manager: Jim Leininger jim.leininger@watsonwyatt.com HONG KONG Watson Wyatt Hong Kong Ltd 29/F., Sun Hung Kai Centre 30 Harbour Road, Hong Kong Tel: (852) Fax: (852) /7700 Office Manager and Asia Pacific Regional Retirement Practice Leader: Bob Charles bob.charles@watsonwyatt.com SHANGHAI Watson Wyatt Consultancy (Shanghai) Ltd 1515 Nanjing Road West 11th Floor, Kerry Center Shanghai , China Tel: (86) Fax: (86) General Manager: Alan Wang alan.wang@watsonwyatt.com SHENZHEN Watson Wyatt Consultancy (Shanghai) Ltd, Shenzhen Branch Room , Zhuo Yue Building 98 Futian Central Zone Shenzhen , China Tel: (86) Fax: (86) General Manager: Eugenie Lai eugenie.lai@watsonwyatt.com TAIPEI Watson Wyatt & Company, Taiwan Branch 5F, 205 Tun Hwa North Road Taipei 105, Taiwan Republic of China Tel: (886) Fax: (886) General Manager: Charles Wang charles.wang@watsonwyatt.com WUHAN Watson Wyatt Wuhan 18th Floor Wisdom Valley Building Luoyu Road East Lake Development District Wuhan , China Tel: (86) Fax: (86) Manager: Xiaoxi Liu xiaoxi.liu@watsonwyatt.com

38 ABOUT WATSON WYATT WORLDWIDE ABOUT THE ASIA-PACIFIC RESEARCH AND INNOVATION CENTRE Watson Wyatt is a global consulting firm focused on human capital and financial management. We specialise in four areas: employee benefits, human capital strategies, technology solutions, and insurance and financial services. We combine human capital and financial expertise to deliver business solutions that drive shareholder value. Our consulting is grounded in the most extensive research in the business. This translates into unique perspectives and forward-thinking solutions. The Asia-Pacific Research and Innovation Centre (ARIC) is a dedicated centre set up to serve as Asia- Pacific s focal point for human capital, benefits, investment and financial services research. Complementing prominent research efforts by other research centres in the USA, Canada and UK, ARIC is committed to supporting research-based consultancy by Watson Wyatt Worldwide through assisting companies create value in their own organisations. Watson Wyatt has approximately 6,000 associates in 30 countries.

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