Civil Service and Military Pension Reforms in Indonesia, Malaysia and Singapore
REFORMING PENSIONS FOR CIVIL AND MILITARY SERVANTS, pp. 59-112, Maruzen Publishing, 2011
Posted: 18 Jan 2012 Last revised: 31 Jan 2012
Date Written: 2011
The 2008 Global Crisis and demographic trends in Indonesia, Malaysia, and Singapore has increased the urgency of reforming their pension systems for enhancing financial, fiscal, and economic sustainability over a long period, and mitigating possible adverse economic impacts. As national and international mobility of labor becomes more pronounced, the implications of superior pension benefits for civil servants and the military personnel as compared to private sector workers merit review.
The civil service and military pensions in these countries have been among the least transparent, their governance structure exhibit conflict of interest, with the beneficiaries designing, implementing, and assessing their own pension benefits. Moreover, as the pension expenditure is a statutory expenditure, it has the first claim over future government revenue as well. This suggests that regardless of the future performance of the economy and the capacity of tax payer to bear the pension expenditure of civil servants and the military, the pension benefits to them will continue. The risk therefore is not borne by the beneficiaries (civil servants and military personnel).
The risk therefore is not borne by the beneficiaries (civil servants and military personnel). This raises the issue of equitable sharing of risk within a given generation and amongst generations. Investment management of civil service and military pension funds is undertaken separately from that of the private sector employees. There is therefore merit in examining these pension systems for addressing the issues raised by the above characteristics.
Keywords: Civil service. Military pension reforms, Indonesia, Singapore, Malaysia, 2008 global economic crisis
JEL Classification: H55, J26, J11, J14
Suggested Citation: Suggested Citation