Young Malaysians Struggle to Build Financial Resilience

Kuala Lumpur, 22 January 2024 – Prudential Malaysia Assurance Berhad (PAMB) today released ‘Fulfilling Futures - Seeking Future Financial Security: The challenges facing young Malaysians’ a report written by Economist Impact, which looked at how Malaysians across different age groups are saving for their future and the challenges faced by young Malaysians to become financially resilient. 

The report shows that concerns about personal finances are strongest among the youngest cohort of Malaysians (aged between 25 and 34). These are mainly young adults who may be in the early stages of their careers. However, they face challenges that limit their ability to save and invest in the future including low wage growth, increase in the cost of living, changes in the employment landscape and limited financial literacy.

Lim Eng Seong, Chief Executive Officer of PAMB said, “This year, Prudential is celebrating 100 years in Malaysia. As such it is fitting that this report explores how we can continue to serve the needs of the next generation of Malaysians as they embark into adulthood. Though the country has gone through many changes over the decades, one issue persists. Malaysians, especially young adults, profess a low satisfaction in their ability to prepare for their future. This is one of the lowest in the 13 markets surveyed.”

The Malaysia findings are part of a region-wide report by Economist Impact “Re-thinking well-being in Asia: How outlooks on life are changing” which surveyed 5,000 people across 13 Asian markets.

For the report, Economist Impact interviewed two experts: Balqais Yusoff, head of the Policy and Strategy Department at the Employees Provident Fund (EPF) of Malaysia and Dr Norma Mansor, president of the Malaysian Economic Association and director of the Social Wellbeing Research Centre at the University of Malaya.

“Young people are finding it increasingly difficult to save,” said Balqais Yusoff. One reason for that is a skill set mismatch—a misalignment between the skills sought after in the labour market and those possessed by individuals—as well as structural wage challenges, which particularly impacts the youngest members of the workforce, according to the research.

Wages have stagnated in recent years for most workforce members, including the youngest ones, according to Dr Norma Mansor, “Wage stagnation has driven many young people, especially those with higher education abroad where the earnings opportunities are greater.” 

Building a retirement nest-egg

As Malaysia’s population starts to age, financial security in retirement is a cause for concern. Less than half of Malaysians (48%) profess satisfaction with their financial well-being, the second lowest among the markets surveyed.

While more than half (57%) are confident of saving enough to support living to age 80 and beyond, this is the lowest figure registered. The survey found that younger Malaysians are more likely to hold multiple jobs to make ends meet with 38% in the 25 – 34 year age group stating they have worked more than one job compared with 26% of those aged between 35 and 44.

In terms of savings, the report found that only a quarter (25%) of those in the 25 – 34 age group contributed to retirement funds such as EPF. Whereas 40% of Malaysians in the 45 – 55 age group did so.

Implications for Malaysia’s future

The research highlights that more needs to be done to improve financial literacy among young Malaysians. This includes greater awareness about the riskier financial instruments. Additionally, more communication is needed about the benefits of protecting incomes and health that will instil stability in later life. 

“This will help address the issues young Malaysians face on their future financial stability. Financial empowerment needs to start from a young age and include continuous learnings that evolve alongside the individual’s growth and stage in life,” according to Lim Eng Seong.

“For PAMB, our corporate responsibility programmes are working towards this agenda. This includes our financial education programmes, Cha-Ching, Duit Right and Adult Financial Education (AFE) that cater to different life ages, from as young as seven and into adulthood. We also have PRUKasih Aman, a micro-insurance solution for the low-income community to help them attain the benefits and protection that comes with an insurance plan,” said Lim Eng Seong.

The ‘Fulfilling Futures - Seeking Future Financial Security: The challenges facing young Malaysians’ report, can be downloaded here.  

For more information on the region-wide report, please refer to here.

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