Sungbae An, Korea Institute for International Economic Policy: To attract better human resources in the public sector, a country in its early development stage tends to offer an exclusive pension scheme to government employees. The scheme is often generous to its earlier participants in that the ratio of pension benefit to employees’ contribution is high. As a result, the sustainability becomes questionable as time passes, and the outlook is even abysmal considering the aging population from rising life expectancy and diminishing fertility rate.
The work by Darmaraj and Narayanan reviews the current development of the civil service pension scheme (CSPS) in Malaysia and investigates its financial sustainability using policy simulation based on the annual pension deficit model. The analysis shows that policy changes such as increasing retirement age, reducing replacement rate, and introducing and increasing employees’ contribution would help the CSPS be financially healthier for the time being. The authors...