How to manage Malaysia’s silver tsunami
Over coffee with Global Leadership Development Forum adviser Prof Sothi Rachagan last week, our discussion centred on one subject: Malaysia’s rapidly greying population, and whether our policymakers are moving fast enough — or merely moving.
The numbers alone should concentrate the mind. Malaysia’s population reached 34.4 million in 2026, but the growth engine is sputtering, at just 0.5% — the slowest in years, according to data from the Department of Statistics Malaysia (DOSM).
More tellingly, 8.4% of the population is now aged 65 and above, up from 8% last year. That’s roughly 2.9 million Malaysians.
Twelve states have crossed the threshold into “ageing state” status, with Perak leading at 10.8% elderly. DOSM projects that Malaysia will become a fully “aged nation” by 2040, with 14.5% of its citizens above 65.
The old-age dependency ratio — the number of elderly people supported by every 100 working-age Malaysians — has risen from 11.4 to 11.9 in just a year.
“These are not abstractions,” Sothi noted. He pointed out that a nation ages long before its institutions notice, and that the danger is always the same: policy catches up only after the demographic wave has already broken over the shore.
For him, the real test of a mature government is not whether it reacts to ageing, but whether it anticipates it in healthcare capacity, pension adequacy, elder-care infrastructure, and the labour market’s willingness to keep older Malaysians productively engaged.
It was in this context that our conversation turned to the EPF’s newly minted i-Legasi facility, launched in May 2026.
For the uninitiated, i-Legasi allows EPF members aged 55 and above to transfer a portion of their retirement savings — specifically, savings exceeding the RM650,000 adequate savings threshold under the Retirement Income Adequacy (RIA) framework — directly into the EPF accounts of a spouse or child.
It is, on its face, an elegant idea: money that would otherwise sit idle above the adequacy line can now strengthen a younger family member’s own retirement runway, rather than being withdrawn in a lump sum and dissipated on consumption.
Sothi was generous in his assessment of the concept. He described i-Legasi as a “thoughtful piece of social engineering”, an acknowledgement, finally, that retirement planning in Malaysia cannot be treated as a single-generation problem when families themselves function as intergenerational safety nets.
Ageing parents topping up their children’s EPF accounts, he observed, is arguably a more disciplined use of surplus savings than the one-off, crisis-driven withdrawal schemes of the pandemic years — i-Sinar, i-Lestari and i-Citra — which together drained over RM101 billion from the retirement system and left millions of members permanently behind on their savings targets.
But — and this was the heart of our discussion — Sothi was equally clear that i-Legasi, as currently structured, is not enough. His concerns were threefold.
First, the RM650,000 adequate savings threshold that gates eligibility excludes the vast majority of Malaysians who will ever need such a facility.
EPF’s own data shows that only around a third of active formal members currently meet even the lower basic savings benchmark, let alone the adequate tier.
A scheme built for the comfortably prepared does little for the precariat nearing retirement with insufficient savings, arguably the group most exposed to Malaysia’s ageing crunch.
Second, i-Legasi only recognises spouses and children as eligible recipients. Sothi raised the question of Malaysia’s growing number of childless retirees, or those whose closest caregivers are siblings or extended family — groups that fall entirely outside the current definition of “immediate family” and are left with no equivalent mechanism.
Third, and perhaps most urgently, he argued that a retirement-transfer facility cannot be evaluated in isolation from the broader adequacy problem.
Raising the savings benchmarks — RM290,000 in 2026, climbing to RM390,000 by 2028 — is meaningless if wage growth, the gig economy’s patchy contribution culture, and youth unemployment (which stood above 10% in recent years) continue to erode the base from which any “adequate” savings must be built in the first place.
This is where our conversation arrived at its central point, one I believe deserves the attention of Putrajaya’s budget planners: i-Legasi is a good scheme. It should not be scrapped.
But it needs a serious, structural review: widening eligibility, reconsidering the threshold’s rigidity, and integrating it with complementary measures for those who will never reach RM650,000 in savings.
And that review, Sothi and I agreed, cannot be left to drift. It must be tabled and addressed in Budget 2027.
Malaysia does not have the luxury of a slow policy cycle here. Every quarter that passes without a wider retirement-adequacy strategy is a quarter in which more Malaysians cross into old age underprepared, and more families absorb the shortfall quietly, without support.
The Budget is the one instrument capable of moving fast enough to matter, through fiscal incentives, expanded eligibility, matching contributions for lower-income transfers, or targeted support for elderly Malaysians outside the nuclear-family model that i-Legasi currently assumes.
As our conversation wound down, Sothi’s closing thought stayed with me: a nation is measured not by how it treats its most productive citizens, but by how deliberately it prepares for the ones who built it.
Malaysia has taken a genuine step forward with i-Legasi. Oct 9 is the day to take the next one.
The views expressed are those of the writer and do not necessarily reflect those of FMT.
