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Malaysia has released its first National Transfer Accounts, which measures how Malaysians at different ages produce, consume, save and support one another across a lifetime. Why is this an important measure, and what does the data tell us about the way Malaysians live, work, support one another and grow old? On this episode of #ConsiderThis Melisa Idris speaks with Datuk Dr Tengku Aizan Tengku Abdul Hamid, Chairperson of the Private Pension Administrator Malaysia and founding director of the Malaysian Research Institute of Ageing (MyAgeing), and Dr Sharifah Azizah Haron, Associate Professor in the Department of Resource Management & Consumer Studies at UPM’s Faculty of Human Ecology.

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00:11Hello and good evening. I'm Melissa Idris. Welcome to Consider This.
00:15This is the show where we want you to consider and then reconsider what you know of the news of
00:19the day.
00:20Malaysia has released its first national transfer accounts
00:24which measures how Malaysians at different ages produce, consume, save and support each other across a lifetime.
00:33Now why is this an important measure and what does the data tell us about how Malaysians live and work
00:39and support and grow old?
00:42Well joining me on the show to help me discuss this and to think this through,
00:46I have with me Dr. Tengku Aizan Tengku Abdul Hamid
00:50who is chairperson of the Private Pensions Administration of Malaysia
00:54which is the central administrator for the private retirement schemes.
00:59She's also the founding director of the Malaysian Research Institute of Ageing also known as MyAgeing.
01:06And joining her is Dr. Sharifah Azizaharun
01:09who is an associate professor in the Department of Resource Management and Consumer Studies at UPM's Faculty of Human Ecology.
01:17Welcome to the show. It's good of you to join me today.
01:19Thank you for inviting us.
01:21I'm very excited to talk about the national transfer account.
01:24But I think there are many of us who are hearing it for the first time.
01:29So maybe we'll begin there.
01:30Can you explain what an NTA is, what it measures
01:34and why this is not just important but very exciting for the country?
01:38I'll begin with you, Datuk.
01:40If you look at the simple term NTA or national transfer accounts,
01:45it's actually an economic life cycle, right?
01:49That's Sharifah.
01:50Because it looks at the economic life cycle of the population.
01:54And at some times, along our life course, we are dependent.
01:58For example, the children and the aged and the others are working.
02:03So at the early life stage, the children are dependent on the parents.
02:09And also when we go to school, we are depending on the provision that is given school
02:15developed by the government and things like that.
02:18And also the health services.
02:21And after we graduate, we enter into the labour force.
02:24Hopefully when we enter into the labour force, we will be working and earning a living.
02:30And also at the same time, we will be starting our own family.
02:33So we have to think about how do we consume, how do we save for the rest of our life.
02:39And also, we also have the formal system where we retire.
02:43And then the retirement age, now it has increased to 60.
02:47And do we have then enough money to save for our retirement?
02:53Because we have all the needs at the middle age of our life cycle.
02:57And then do we have enough to save and things like that.
03:00So this is where when you look at NTA, they provide you with a graphic picture of the life cycle
03:08stages,
03:08and the consumption and the saving schemes in that perspective.
03:13So I think I will leave to Dr. Sharifah for more further elaboration.
03:18Yeah, it's actually you can look at it as like a biography of your money for the nation across different
03:26generations.
03:27Yes.
03:28It's like a giant ledger where you can see people consume and earn throughout the whole, for every single age.
03:37So we can understand that there will be a generation where they are dependent on others,
03:43and there will be a generation who are productive, and they have access,
03:48and they use this access to help out other generations, whether it's a downward generation or upward generation.
03:55Yes.
03:56So that is what the NTA is about.
03:58And we are also concerned about how do they finance the deficit.
04:02Yes.
04:03Because we have the deficit, some of it is a bit, a giant one,
04:08and we may be concerned about how big is the surplus to cover for the deficit.
04:12Okay. Well, let's elaborate more on the deficit.
04:14So when you talk about a deficit, it is how much we consume versus how much we produce.
04:21Correct. That's correct.
04:21So say labour income versus consumption.
04:24Correct.
04:24And then you get a surplus or a deficit.
04:26Yes.
04:26Correct.
04:26And what was found in the data is that Malaysians in general tend to only hit a surplus at the
04:35age of…
04:3629.
04:3629, yes.
04:38Yes.
04:38…and then that's the surplus years, and then we hit a deficit…
04:41Retirement.
04:4256.
04:4356, yes.
04:44Okay.
04:44That's not a very long time for surplus.
04:47Very true.
04:48And that for me was one of the most striking findings from the data, what the data revealed to me.
04:56I was quite surprised at how short the period of surplus was.
05:00Yes.
05:00Can I ask both of you, having worked on this data and this measure for so long, what stands out
05:05to you with the NTA and Malaysia's data?
05:08I think this is the first time we actually visualise the consumption pattern and the production pattern also.
05:17Yeah.
05:17Because, and it really, the visualisation really shocks us.
05:23Because we only know, we only hear, you know, about deficit, about all those kind of things.
05:29Yes.
05:29But this data, together with the calculation, shows us graphically where we are and where we are going, actually.
05:39Exactly.
05:39And the interpretation of how policies will need to be intervened so that we can extend our life course and
05:48things like that.
05:48But remember now, we are ageing.
05:51And our life in retirement is maybe as the same as the life in our work life.
05:57So how do we have enough?
05:59For example, right now, we work, say, 30 years, okay?
06:03So I retired when I was over 35 years in service.
06:08And inshallah, with better life, with better health condition and things like that, I might be living more than 30
06:15years in my retirement life.
06:16So do I then have enough to save?
06:19But I'm lucky in the sense that I was on a pension scheme.
06:23So I have monthly, a monthly pension.
06:25But I also need to add into my income because if I want to live a luxury life, I cannot
06:33depend on pension alone.
06:34And we also know, right, that some of us, because we don't have enough for retirement, we have to work
06:42even when we are retired.
06:44But some of us working in retirement is a choice.
06:47So there are situations where you look at how the people live across the line.
06:55For example, people age 60 in KL and who have steady job.
07:01And people age 60 in some part of, let's say, Johor, but do not have steady job.
07:08So the capacity to save is much better for people who have steady job compared to people who have unstable
07:18job and things like that.
07:19So you need to look at the whole economic life cycle to discuss this.
07:25So even though it's just a simple graph that you see, but the interpretation and the policy implication is very
07:33great.
07:33I love that this is a wonderful complement to the series of data that we have.
07:39We have the GDP and all these measures of growth.
07:41But this feels reflective of what I'm going through, of what people on the street are going through.
07:46Dr. Sharifa, what stood out the most to you having looked at this data?
07:51Well, the size of the surplus is quite tiny in a way.
07:56And the deficit is very big.
07:59So the concern will be whether we have enough to support the deficit based on the surplus that we have.
08:06So that is one big concern.
08:11Sorry to interrupt you, but to elaborate on the size of the surplus and the deficit, could you tell me,
08:16can you give me an example?
08:17So what I'm looking at here is, let's say we live to 75 of an average, that would mean 48
08:27years, 49 years of life is spent in deficit.
08:31In a way, yes.
08:32In a way, yes.
08:34Okay.
08:34Yes.
08:35So not only that, during our productive years where we have a very limited duration where we can actually save
08:43and try to maximize our surplus,
08:47we are actually bogged down by the requirement to take care of the generation below us and above us.
08:55So the problem will be, or probably the issue will be, to make sure that the working age population will
09:03not be, you know, like the hero that is not really happy in the end,
09:10because they are run out of resources in a way, because they already finished up the resources and they don't
09:16even have enough for themselves to, you know, to prepare for their own retirement.
09:22So this is the very big concern.
09:24But I think also, we need to really look at the life cycle deficit as it is not a problem
09:33by itself, I think, because it is actually a normal part of human life.
09:38But the important questions that we have to raise is how societies manage and finance this deficit fairly and sustainably.
09:48That's an issue because it's normal part. We consume and then we work and then we stop work.
09:56But the most important thing is to look, how does then society manage this? Because that's critical.
10:03How are the deficits funded? Let's look at that. To what ratio and to what extent?
10:09Okay. For the young one, they are totally dependent on transfer. Transfer can be either public transfer or private transfer.
10:19Public transfer is like government funding your education and also your health.
10:23Yes, exactly. Yes. So that is why when, you know, for the age group between school age, most of the
10:31government expenditure is on that.
10:33Okay. And for the older generation, they are mostly on the healthcare. All right. And we understand for the older
10:42generation, they can actually, their bucket is actually filled up by the government, by the family and also by the
10:49market.
10:49Right. Meaning that if they have the chance to save earlier during the time when they can be productive and
10:56make, you know, like wealth accumulation during that time, they can use that to be safe during the time when
11:02they need the money to finance their old age.
11:05And at the same time, they also have this family transfer, meaning, for example, a son giving money to the
11:12parents so that they can survive and things like that. And also for the government to help out, you know,
11:19when you go to the hospital, you only have to pay like a few ringgits to get into the hospital
11:24and get some service.
11:25Okay. So those are actually what they can get when they are old. So meaning that they have more sources
11:31of income to finance their old age. But the problem is, in Malaysia, about 80%, you know, based on the
11:39record or the report by the ADOSM, 84% of whatever that the older person is expecting is coming from
11:49the family and also from the asset reallocation, meaning that their own saving and also from
11:55the family who take care of the family who take care of them. So this become a crisis when your
12:00family is getting smaller and the working age population is getting smaller and they also have a lot of commitment,
12:09meaning that not only they have to take care of the older generation, they also have to take care of
12:14the younger generation.
12:16So they are really squeezed and they can run off resources. And that become a crisis when we have a
12:23lot more older generation and shrinking working age population.
12:27Yeah, I think one important thing is that the demography are changing very fast, but the social institution are still
12:35adjusting to the demography reality because social institution is difficult to change. So that is why we are now looking
12:43at how does this mismatch happens because the demography, remember, I think our replacement rate was achieved within 2010 or
12:54something like that, you know, fertility rate.
12:56Yeah, and once below replacement, now it's below replacement. So, but then the institutions that are looking at the social
13:03economic institution are not there yet to be at par with this demographic changes.
13:09So this is where I think policy incentive and thinking of solving the problems of the people. Because to me,
13:19many, many ways that we are doing planning, but really we are not solving. So I think the perspective of
13:27looking at this graphic presentation and the reality really struck you.
13:33So how then we, as a policymaker or as a community, try to chip in so that we will not
13:42be suffering in the future.
13:44So then I have to ask you, if policymakers were to really utilize this data correctly, properly, what kind of
13:53policies might it change? What decisions could it improve? What would you like to see?
13:58I think, if you look at the short term that they have to save, then we should extend this, I
14:09think from 29 to 55 or something like that. So we need to look at both ends.
14:14What we need to do is, at the younger age, we need to have the policies that assist younger generation,
14:22the youth and things like that to work.
14:24Because 29, to enter surplus at 29 is a bit late, isn't it?
14:30It's a bit late. So I think that there must be policy in place so that these people can work.
14:37If they don't pay in context, it's also okay, but at least they have something to save and things like
14:43that.
14:44And also at the end of the day, you must also see, so if the graph is like this, so
14:50you have to push this side and you also have to push this side so there's a lot more saving.
14:55So in the sense that, in the sense that, in the sense that, but to me, it is critical to
15:04look at it long term because it is a life course.
15:08This is one generation because I think my generation, I'm the baby boomer generation, so I think we went through
15:14three different era, you know, where we are in a better position to save.
15:20And there are also a lot of services now that are able to, that encourages us to save.
15:28Because when I came back in the 80s, hardly anything, you know, instruments, but now there is a lot.
15:34But many of us are not literate financially.
15:38So even though we have services, let me talk to you about this individual account with PRS and things like
15:45that.
15:45Because we know that the government knows that EPF is not enough, the government pension scheme is not enough.
15:52So in 2012, they developed the private retirement schemes, okay.
15:58So, and this should be the third pillar for saving.
16:03But not many of us are aware of the benefit of this.
16:07And maybe because there's not much surplus for us to do saving.
16:14So that's a chicken and egg being squeezed in terms of income.
16:19Yes, yes, yes.
16:20So, but these are the opportunities that are available now for us to save.
16:25And in fact, now the government gives us a rebate.
16:29If you put in RM3,000 per year, you get a tax rebate for that.
16:35Yes, that's right, yes.
16:36And I think, and the returns that we have, because it's an investment scheme, you have to be responsible for
16:42yourself.
16:43And our habit is, you put in saving, somebody manage for you and then you forget it.
16:48But not in PRS, because you have to monitor yourself.
16:53Because, and recently, a week, two weeks or three weeks ago, PPA did an award ceremony for fund managers that
17:03are doing very well.
17:05Okay.
17:05So rewarding performance.
17:07Yes, yes.
17:08So I think that's where any investor, they want performance.
17:12So that is where we are changing the narratives of we need to save, we need to be responsible, but
17:18you must be fitting your risk tolerance.
17:20Yeah, so that's the financial literacy that comes in.
17:24Dr. Sharifa, can I ask you, having worked on the data, what are you hoping policymakers use this data to
17:30improve, particularly in some of the social institutional gaps?
17:36Okay.
17:37NTA would suggest you to take care of each generation, actually.
17:41There is no age battle, you know, like, it's not a battle for among the generations, it's not like that.
17:48It's not, it's not, it's not, it's not, it's not, you have to take care of each generation, so that
17:53at the end of the day, the future elderly will be better off.
17:58Yeah.
17:58Because, like what all this, Prof said, the future older person is already born.
18:04Yes.
18:04Meaning that you should take care of each generation, because if you are only taking care of the older generation,
18:12the current generation, so you are doing like management by crisis, it's like firefighting.
18:18Yeah.
18:18Because you need to take the perspective, a lifespan perspective, where you really start from the beginning.
18:27So each generation, you have to take care of it, make sure for the young generation, the first 1,000
18:33days, is it right, Prof?
18:34Yeah.
18:34The first 1,000 days, you have to take care of that, so that health-wise, they know, you know,
18:39they are healthier.
18:40And education-wise, they will be more productive when they are moving into the next generation.
18:46So you also need to take care of the workers, because they are in need of help.
18:52Yeah.
18:52For example, for the women, they may need help in terms of childcare.
18:58Yeah.
18:58So we have to take care of each generation, and for the old generation, who are currently probably mostly the
19:04transitional older person, because they are mostly born before the independence, they have less opportunity to have a more productive
19:15career or job, so that they are, you know, like probably mostly work at a menial job.
19:21But as we move further later on, the older generation will be more educated and having more opportunity and having
19:31the opportunity to save and that kind of thing.
19:34So each generation needs to be taken care of using what they need, identifying what they need, so that we
19:41sort of having a long-term perspective of adjusting and also, what do you call it?
19:49We try to, we try to soften the impact of ageing.
19:52Soften the impact of ageing.
19:53Yeah.
19:54It has to be through the life cycle.
19:56Life cycle.
19:56Yes.
19:56My worry is about the, what happens when there's inequalities between these households, this generational.
20:06How do you provide intergenerational support when there are such stark realities?
20:11There will be some families who might not be able to have the wealth accumulation.
20:16So let's just say a middle, the middle, the product surplus generation doesn't accumulate enough wealth the way the previous
20:26generation did.
20:27Is that a concern?
20:28Because I feel the NTA framework really reveals this future challenge for us.
20:35I think the most important thing that we need to think about is one, it is lifelong and then the
20:44longevity that we have is important and critical because it shows our success story.
20:50But then also, we need to look at the behavioural economics of all of us because how we behave, even
21:01though we have surplus money, if we overspend and things like that, we are not rational and we don't have
21:08much.
21:08But if somebody who doesn't have much but put in the system that every day I have to save, be
21:17disciplined about it and they would, at the end of the day, would have money.
21:22So this is where the behavioural economics comes into play and it is all about ourselves.
21:28How do we see ourselves in the future and what is our goal in terms of finances and in terms
21:35of our life?
21:36Because if you look at from, of course, from the Islamic perspective, you are living a middle life, not too
21:45lavish but not too, but optimal for whatever you have.
21:51But if you start practicing on having debts and things like that to support your lifestyle, that's not the right
22:01decision.
22:02So I think this is where your own behavioural economics plays a role.
22:06And also to me, we are actually, I think if, I'm sorry to say this, but there are certain, what
22:16do you call, advertisements about you, you buy now, pay later kind of that.
22:22That's dangerous to me, that's dangerous.
22:24And when we don't have very highly educated people in terms of finance.
22:29So this is where I think the role of the government comes into play.
22:34Because I think this is where you cannot let loose this kind of things, you know, because, because I think
22:40we, as, as a public, you must be disciplined with yourself, even your health.
22:45For example, if we have now the, the, the worst diabetes, NCD around the region, but how are we managing
22:54it ourselves?
22:55Because we need to manage it ourselves because it costs a lot.
22:59It costs also the, the production or the economic productivity of the nation.
23:05So you, you need to think in totality like that because, because for, for us, for individual, it means my
23:12children will have to take care of me, you know, because they have to buy, maybe I don't have health
23:18insurance and things like that.
23:19So, and, and, and when these people grow old, we do not have a social protection for this generation.
23:27So this is where the long-term perspective of the intergenerational support is very critical in our thinking.
23:36So this is where Dr. Shri Farah has improved.
23:41Prof is saying that we have to focus on the financial education and self-care.
23:46So we also need to pay nutritional education, you know, how to eat right, even at the beginning of your
23:53life, and then talking about finance.
23:56So these two must go together because otherwise we are living longer, but we are actually delaying death rather than
24:04enjoying the life, which is healthy and productive.
24:09And you can contribute more because of your long age and things like that.
24:13You need to add life to years, not years to life.
24:17Oh, thank you.
24:19And on that note, I think that's a wonderful place to end our conversation.
24:23Thank you so much for coming and sharing some of the perspective of why we should pay attention to this
24:28framework.
24:29I think it's an exciting time for the way we're looking at a Malaysian life cycle.
24:34I think it gives you a total perspective of it.
24:36Absolutely. Thank you for your time.
24:38That's all the time we have for you on this episode of Consider This.
24:41I'm Melissa Idris signing off for the evening.
24:43Thank you so much for watching and good night.

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