Chalongphob Sussangkarn,  Thailand Development Research Institute: This paper analyzed the financial sustainability of the Malaysian civil service pension scheme (CSPS), looking ahead to 2080. It provided a brief description of the CSPS and past developments. The main part of the paper applied the annual pension deficit model (APDM), as developed by Yi (2011), to assess the financial sustainability of the CSPS. Alternative scenarios of financial sustainability were analyzed by varying three policy variables: (1) increase in the retirement age; (2) reduction in the replacement rate; and (3) the introduction of contribution by employees (or raising the rate once contributions are introduced). Combinations of the three policy variables were also analyzed.

Results from some scenarios can be highlighted. In the base scenario (no changes), a huge financial gap of 11.27 percent of GDP was projected by 2080 if no changes are made to the scheme. In Scenario 4, the...

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