All new hires for the state civil service will be recruited under a non-pensionable remuneration scheme known as the ‘Contributions-Based Posts’ (CBP).
Under this scheme, the new hires will contribute to the Employees Provident Fund (EPF) retirement scheme instead of receiving a monthly pension from the government upon retirement.
The purpose of this change, explained by Sarawak State Secretary Datuk Amar Mohamad Abu Bakar Marzuki, is to provide civil servants with greater career flexibility and options if they are interested in exploring opportunities outside the civil service.
The traditional pension scheme under the Public Service Department (JPA) can put civil servants in a difficult situation if they want to leave before retirement, especially when they have better offers from the corporate sector.
By transitioning to the corporate sector, they would have to forgo their pension scheme. The new scheme also aims to attract more young professionals to join and serve in the Sarawak government.
Despite not receiving a monthly pension after retirement, the newly recruited civil servants will still enjoy permanent employment and receive perks and benefits similar to those offered under the traditional pension scheme, such as medical and housing benefits.
Abu Bakar declared in an interview that this move is a strategic effort to modernize the Sarawak civil service and stay relevant in the changing world, considering the preferences of the new generations who like to shift careers and gain experience in different companies, industries, or environments.
I wholeheartedly agree with this decision, although there is room for enhancing its attractiveness further.
Firstly, it reflects the state government’s commitment to keeping pace with current market demands and trends, rather than adhering to outdated practices. EPF-based employment offers greater flexibility in managing retirement funds, allowing individuals to have more control over their savings compared to the rigid structure of a pension plan.
Secondly, it enables individuals to contribute to their EPF accounts even if they change jobs or sectors, providing continuity and accumulation of retirement savings.
The new scheme also provides investment opportunities, allowing EPF contributions to be invested in approved instruments, potentially generating higher returns compared to fixed pension benefits.
Additionally, the scheme offers flexibility to contributors, allowing them to withdraw their savings for specific purposes such as education, medical expenses, or housing, providing liquidity when needed.
Although contributors may not have fixed monthly pensions, they have the option to choose from various withdrawal options upon retirement, providing more choices in managing post-retirement finances.
They can opt for a lump sum withdrawal or a regular monthly income facilitated through EPF’s retirement withdrawal schemes.
It’s worth noting that non-pensionable remuneration schemes, like the ‘Contributions-Based Posts’ (CBP), have become increasingly common in various sectors and industries worldwide because the schemes offer employees more flexibility and control over their retirement savings while adapting to the changing dynamics of the modern workforce.
By moving away from traditional pension plans, organizations and governments aim to align their employment practices with the preferences of younger generations who prioritize career mobility, personal development, and financial autonomy. This shift allows individuals to take charge of their retirement planning and make decisions that suit their unique circumstances and goals.
The transition from traditional pension plans to contribution-based schemes requires careful consideration and effective communication to ensure that employees fully understand the implications and benefits of the new arrangements.
Education and support programmes can be put in place to assist employees in making informed decisions about their retirement planning and to address any concerns or uncertainties they may have.
Overall, I firmly believe that the CBP scheme is a superior option compared to the traditional pension scheme.
I commend the state government for its bold decision, and I anticipate that it will be well received by all stakeholders involved. Hats off to the Sarawak State Government!
DISCLAIMER:
The views expressed here are those of the writer and do not necessarily represent the views of the New Sarawak Tribune.
