of an appropriate tax mechanism for pension system that will encourage greater retirement savings. again, the role of the government must be re - emphasized, primarily in packaging suitable tax advantages which can be offered in order to incentivise even the population outside the formal sector of employment to promote higher contributions. some pension markets remain underdeveloped or at least underutilised in part due to tax disincentives. as such, the design and implementation of an appropriate tax framework incorporating preferential tax treatment could facilitate the promotion of long - term savings. the problems experienced in recent years by public funded pension systems highlighted the importance of complementary or supplementary forms of private savings initiatives. the emergence of institutional investors in particular, primarily as risk transfer conduits and as collectors of savings has shifted focus from publicly funded pensions systems to private savings schemes. this is the fourth and last initiative i will attempt to raise. in order to reduce the cost of providing for the social security of the ageing population, developed countries have encouraged the development of private pension schemes through tax incentives. in some developed countries, employees are given higher personal tax relief for contributions to approved pension schemes. while some countries have made private pensions mandatory, others continue to grapple with ways to promote participation in private pension systems in order for households to meet adequate retirement income needs. as such, measures need to be taken to incentivise private pension schemes. the enhanced savings intermediation could, to a large extent prompt the development of a more diversified financial system which would be less reliant on banks and consequently help reduce the overall risk of contagion. the past decade has underscored the importance of pension systems to the economic stability of countries and the security of their ageing population. the experience with reforms has also shown that no one size fits all, that countries have different combinations of the elements of an effective pension system to consider depending on their individual circumstances. however, what remained relevant are the two broad aims of any pension system, that is to reduce poverty and eliminate the risk of rapidly falling living standards in retirement. in this regard, the multi - pillar pension framework as advocated by the world bank would be a good guide to mobilize both the government as well as the insurance industry to develop a sustainable pension system. the application of the reform framework nonetheless requires a combination of measures that include effective fiscal policy and incentives as well as the development of the capital market so that the collective outcome is effective in its entirety. on

risk posed by an ageing population. a majority of pension schemes are built on the premise that the government is able to support the defined benefit pension payments as and when they become due. in simple terms, this essentially means that i will be financially taken care of by the government when i'm old. however, this notion may not be financially sustainable anymore as most pension schemes have not imputed the impact of longevity risk at the outset. longevity had resulted in a higher number of retirees drawing pension benefits vis - a - vis the gainfully employed tax - paying persons, thereby contributing to untenable fiscal deficits. in response to this challenge, some countries are shifting towards the defined contribution ( dc ) schemes. however, while a dc scheme could address the issue of sustainability, it would not adequately cater the need to provide a stream of benefit payment throughout the lives of retirees, especially for those who outlived their retirement savings. in malaysia, for example, most of those employed are mandated to contribute to a defined contribution ( dc ) scheme known as the employees provident fund ( epf for short ). a recent survey conducted revealed that a bout 72 % of epf contributors spend their entire epf savings within 3 years of retirement, i. e., by the age of 58, an average retiree would have all his retirement savings depleted. in the case of a man, he has to be financially self - supporting for the next 17 years of his life, assuming he lives till 75. presumably, his retirement needs will be met by family members. however, with diminishing “ extended family ” values, it is uncertain if this will eventually happen. another significant challenge is to modify the structure of mandatory pension schemes itself, of which many are based on a full - time employment model. most countries in this region do not have extensive pension schemes to cover both the formal and informal sectors. i understand that in thailand and china, for example, only about 4 % and 60 % of the labour force is respectively covered. the full - time employment model does not adequately address the profound changes in employment patterns, which economies are now experiencing, such as the increasing number of women in the workforce. then again, most pension schemes are also designed for workers with full and uninterrupted careers. this does not reflect the experience of women, as we see more and more today, who may leave their jobs to become full time housewives or homemaker. breakdown of marriage