June 28, 2011

MALAYSIA: Lack of financial awareness may aggravate quality of life on retirement

PUTRAJAYA, June 28 (Bernama) -- The lack of financial awareness and of available investment products at an early age may aggravate the quality of life on retirement, said Deputy Finance Minister, Datuk Dr Awang Adek Hussin.

Awang Adek said it may also create social problems and increase the burden of tax payers in providing for the social welfare of senior citizens.

"Various policy measures have been drawn up to increase the life insurance penetration rate to 75 per cent by 2020. Currently, it is at 41 per cent of the population, or 2.8 per cent of gross domestic product, compared to Singapore''s 6.1 per cent and Japan''s 7.5 per cent," he said at the launch of Bank Simpanan Nasional''s wealth management products and services here today.

He said the penetration rate of takaful products among the 16 million Muslims was only 10 per cent, while lack of awareness on the importance of wasiat or will writing has resulted in RM42 billion worth of assets belonging to those who died intestate, being frozen.

"Therefore, it is vital for the financial institutions to take educate and offer the solutions to the society," he said.

Awang Adek said despite the rising costs of medical treatment, about 15 million, or 60 per cent of Malaysians, did not have insurance coverage to cushion them against the potentially high medical expenses.

He said another area of concern was the rising education expenses.

"The common advice would be to save and invest your money as early as possible and diversity your investment portfolios to hedge against the increase in cost of living and education," he said.

Awang Adek said the competitiveness of banking sector also needed to be enhanced to withstand forces of change and compete in a more liberalised environment.

He said successful institutions will be the ones with the ability to adapt swiftly and respond to the changing market needs through innovative and differentiated products offerings, excellent service quality and superior level of efficiency.

"With growing competition in traditional banking products and services, banking institutions, BSN in particular, need to continually strive for excellence in product development capabilities with a greater focus on customised and higher value-added services," he said.

Copyright © 2011 Yahoo! Southeast Asia Pte Ltd
Credit: Reports and photographs are property of owners of intellectual rights.  
Seniors World Chronicle, a not-for-profit, serves to chronicle and widen their reach.