Skim Saraan Bercagar Launch

YB SENATOR TENGKU DATUK SERI UTAMA ZAFRUL BIN TENGKU ABDUL AZIZ
Finance Minister of Malaysia

SPEECH
Skim Saraan Bercagar Launch

14 December 2021, Sheraton Petaling Jaya Hotel

Bismillahhirahmannirrahim.
Assalammualaikum Warahmatullahi Wabarakatuh

Yang Berbahagia Dato' Bakarudin Bin Ishak
Chairman of Cagamas Berhad

Yang Berbahagia Tan Sri Ahmad Badri Mohd Zahir
Chairman of Employees Provident Fund

Yang Berbahagia Datuk Syed Zaid Albar
Executive Chairman of Securities Commission Malaysia

Senior Representatives of Cagamas Berhad, Bank Negara Malaysia (BNM), Agensi Kaunseling dan Pengurusan Kredit (AKPK) as well as Employees Provident Fund (EPF)

Members of the Media Distinguised Guests Ladies and gentlemen,

Salam sejahtera & a very good afternoon

1. It is an honour for me to be here today for the official launch of Cagamas’ Skim Saraan Bercagar and the signing of a Memorandum of Understanding between Cagamas, the Employees Provident Fund (EPF) and Agensi Kaunseling dan Pengurusan Kredit (AKPK).
   
   
2. As we enter the year 2022, our immediate priority in terms of COVID-19 must be the efficient and continued management of the pandemic’s impact on individuals, households and businesses. Protecting people’s lives is crucial to preventing further strains on the country’s health care system, which is vital to prevent further lockdowns, and ensure safe resumption of social and economic activities.
   
   
3. While we expect the outlook for 2022 to improve following signs of continued growth and recovery, we acknowledge the uncertainty that lies ahead. Global health officials are concerned about the new Omicron variant, which may render vaccinations less effective due to its high number of mutations. As a result, in the long run, this poses a risk to the economy’s on-going recovery.
   
   
4. In this context, COVID-19 has made it more challenging when it comes to old age income security. Retirement is a significant stage in one’s life. After years of hard work, many are finally able to enjoy the fruits of their labour. Unfortunately, this may not hold true for everyone. Certain segments of our society are forced to retire and rely solely on pension and retirement savings for their daily living.
   
   
5. The fear of not having enough for retirement is made worse by the rising cost of living over the years, particularly medical care, which is critical as we age.

Ladies and gentlemen,

6. To alleviate the people's burden due to the COVID-19 pandemic, the Government and EPF have implemented three withdrawal schemes, with a total of 101 billion Ringgit withdrawn by 7.4 million members.
   
   
7. While it has helped members in need, the withdrawal schemes have also raised concerns on old-age pension adequacy. Following the withdrawals, we discovered that 50% of members under the age of 55 have less than 10,000 ringgit in their account, where 3.6 million members have less than one thousand ringgit. As a result, nearly three-quarters of these members may not have sufficient funds to retire above the poverty line.
   
   
8. This is especially concerning for Bumiputera members, who account for nearly 80% of the withdrawal applicants. As a result, more than half of Bumiputera members now have less than 10,000 ringgit, and a quarter have less than one thousand ringgit.
   
   
9. Therefore, today’s event is significant because it broadens the financing options available to our Keluarga Malaysia, particularly retirees, who can now unlock the equity value of their property and convert it into a fixed monthly income stream throughout their life.
   
   
10. In line with the Government’s recent emphasis on improving the Rakyat’s social safety net, the introduction of Skim Saraan Bercagar is timely, especially for those whose income and savings have been adversely impacted by the pandemic. Indeed, this product could serve as a financial lifeline to help them sustain the remaining years of their lives.
    
    
11. Moreover, this scheme is more than just a novel product. It represents a significant shift in our focus towards addressing the issue of insufficient retirement savings for the lower-income group.
    
    
12. Therefore, I would like to congratulate Cagamas for its innovative solution through the Skim Saraan Bercagar. This is consistent with Cagamas' goals and mandate to contribute to the country’s development – in line with the spirit of “Keluarga Malaysia”. We must all work together to ensure the nation’s socioeconomic recovery following COVID-19, and its development into a high-income country that is resilient to future shocks and challenges.
    
    
13. I am also pleased to announce that we will be granting stamp duty exemptions on the transaction documents executed for this scheme, applicable for the first two (2) years after the scheme is launched. This will further strengthen the Government’s effort in supporting private sector initiatives such as Skim Saraan Bercagar. This exemption will help reduce the cost for borrowers who will benefit from this scheme, and ensure it is more accessible for retirees.

The Way Forward: Budget 2022 & Reforms for our Ageing Society

Ladies and Gentlemen,

14. According to the United Nations and the World Bank, Malaysia will become an aged nation within the next 20 years, with an "ageing" rate comparable to that of Japan and other high-income economies.
    
    
15. And we can observe that recent data from our Department of Statistics (DoSM) validates such estimates. This is because for this year, Malaysians aged 60 and above represents about 11.2% of our population, which is not far from the expected 15% by 2030.
    
    
16. Therefore, this reflects a growing segment of the population that may require financial assistance to sustain their livelihoods. According to the Securities Commission Malaysia's (SC) Capital Market Masterplan 3 (CMP3), it is estimated that 40% of our population is not covered by any form of social protection, and many are expected to have insufficient funds for retirement. Official figures estimate that pension payments could reach 46.6 billion ringgit in 2030, up from 9.88 billion ringgit in 2010.
    
    
17. As a result of the ageing trend, we are confronted with new challenges in areas such as employment, income security, and aged care. In order to address this, the Government has pledged to continue and improve various programmes which
    
    
18. Moreover, the Government remains committed to ensuring
    
    
    • Direct aid, incentives and job creation, such as the Bantuan Keluarga Malaysia; a comprehensive repayment assistance programme via the Program Pengurusan dan Ketahanan Kewangan (or “URUS”) for the B50; continuation of Wage Subsidy Program for targeted sectors; and the JaminKerja initiative which targets to generate 600,00 job opportunities; and
      
      
    • specific initiatives to improve social and financial safety net, including one hundred million ringgit matching grants for NGOs focused on community empowerment; increased Perlindungan Tenang Voucher to seventy five ringgit with expanded coverage for insurance and takaful products; expansion of mySalam and i-Saraan initiative; as well as the expansion of SOCSO's coverage to 9 new categories, namely artists, hawkers, fisheries, agriculture, tourism sector, OKU, Orang Asli, Orang Asal Sabah Sarawak and Community Rehabilitation supervisors and staff.

Ladies and gentlemen,

19. As more Malaysians retire in the future, we must recognise the importance of our retirees and their contribution to a productive economy.
    
    
20. In this context, the MOF is looking to develop the right policies and structural reforms in the future to ensure the independence of the ageing population, and to create a more inclusive society. As such, the Social Protection Council (MySPC) has been reactivated and is actively looking at various options for a comprehensive and integrated social security policy.
    
    
21. We must realise that a healthy ageing population can participate in and contribute to the nation’s sustainable and productive growth. To that end, the Skim Saraan Bercagar is part of the country’s broader efforts to provide a robust retirement plan that will allow senior citizens to continue leading a productive life in their golden years.
    
    
22. Congratulations and thank you to all parties involved in the successful launch and implementation of Skim Saraan Bercagar, which includes not only Cagamas, but also the EPF and AKPK. This collaboration exemplifies Keluarga Malaysia’s commitment to ensure a more robust and inclusive economy, as we progress toward becoming a more developed nation.

Wabillahitaufik walhidayah. Wassalamualaikum wbt. Thank you.