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A study on employee choice of retirement schemes : empirical evidence from Malaysian public universities

Tolos, Habibah


Habibah Tolos


Peijie, 1965 Wang

Mike Tayles


Retirement systems are generally classified into two categories, namely, defined benefit (DB) and defined contribution (DC) plans. These plans differ in the method used to determine the benefits, or in the distribution of risk. While reducing the provision of the DB plan and replacing the DB plan with the DC plan are the contemporary trends world-wide, DB and DC plans still constitute the two major types of retirement schemes. Consequently, to choose between the two options is among the decisions faced by individuals and organisations. Alternatively, an individual may also voluntarily set up his or her own supplementary retirement plans through savings.

Malaysia, like many other developing countries, continues to face the problem of an ageing population which has become increasingly important to tackle. Consequently, employers, the government and employees need to make tough decisions to formulate the best retirement plan that can satisfy and meet the needs of the Malaysian workforce. Since there has been no study that has focused on the choice between the DB and DC retirement plans and the satisfaction of the workforce with the existing retirement plans in Malaysia, this is a gap that this research attempts to fill. Moreover, individual employees’ retirement decisions and choice patterns have not been extensively investigated despite the fact that their inputs are vital due to the greater responsibility of employees to set up their own retirement plans in the future.

This research aims to study the factors predictors) that influence the type of retirement plans chosen by Malaysian public universities’ employees guided by the Bounded-Rationality-Theory. The factors that influence and help predict the choice of retirement plans include demographic-features, knowledge level, voluntary savings perceptions, extension of working years beyond retirement, health status, peer effects, retirement income sources, preferences for certain plan features, mobility, job aspects and risk-benefit considerations. The research output from this study will provide intelligence and advice on retirement behaviour of Malaysian civil servants who are expected to decide on: (1) choice between DB (PENSION) versus DC (Employee Provident Fund/EPF) schemes; and (2) choice between owning versus not-owning any voluntary retirement scheme.

Employing the multidimensional positivist paradigm, the researcher has conducted a questionnaire survey involving 348 Malaysian public university employees with a stratified random sampling method to collect primary data. Questionnaire feedback and responses were analysed applying two main binary models of logistic-regression. Eleven semi-structured interviews were analysed using the content analysis technique to complement the questionnaire results.

The results were illuminating. First, they revealed an above-average level of satisfaction perceived by employees. Second, a statistically significant difference in satisfaction between the EPF and PENSION schemes has been found with higher satisfaction being recorded within the PENSION group. As for the voluntary scheme choice, the OWN group were significantly more satisfied compared to the NOT-OWN group. Knowledge, demographics, retirement income sources and plan features were variables found to influence the choice of compulsory schemes. The same variables, together with perceptions on voluntary savings, job related aspects, extension of working years beyond retirement, health status as well as preferences on risk and benefits were found to influence the decision to buy a voluntary scheme. There were no major contradictions between the qualitative findings and the quantitative results. The findings will be beneficial not only to the government in improving the national retirement system, but also to the industrial players in targeting potential customers for their retirement products.


Tolos, H. (2012). A study on employee choice of retirement schemes : empirical evidence from Malaysian public universities. (Thesis). University of Hull. Retrieved from

Thesis Type Thesis
Deposit Date May 3, 2013
Publicly Available Date Feb 22, 2023
Keywords Business
Public URL
Additional Information Business School, The University of Hull
Award Date Jun 1, 2012


Thesis (5.4 Mb)

Copyright Statement
© 2012 Tolos, Habibah. All rights reserved. No part of this publication may be reproduced without the written permission of the copyright holder.

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