You need to save like a Malaysian

If you want a comfortable retirement, you need to follow the Malaysian example.

Remember the phrase “The state will provide”. People really used to say it, back in the day. Maybe they even believed it.

The state doesn’t provide so much today. Not unless you’re impressed by a basic state pension of £102.15 a week, which is what single people get. That’s £5,312 a year, one-fifth of the average national salary of £25,948.

You might get this topped up with pension credit, council tax and housing benefit, but will still spend your final years in poverty. That’s nothing to look forward to.

The state we’re in

Deep down, we know the state won’t provide, but act as if it will. Why do we perform this tricky mental backflip? Because it spares us the expense of saving into a pension.

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A better state of mind

Malaysia? What’s that that got to do with the price of pensions? Well, according to another report, this time from HSBC, people in Asian countries such as Malaysia and Singapore don’t expect the state to provide.

And that means they make a much bigger effort to save. No excuses, no moaning, no mental backflips. They know where they stand: On their own two feets.

Two feets good

No, that isn’t a grammatical error. I was in Malaysia 20 years ago, in Kuala Lumpur, where I found myself hectored by a wrinkled old local with a bizarre grudge against the British welfare state. That was the phrase he used, over and over again. “People have to stand on their own two feets.” He said the welfare state stopped them from doing it. He was very irritable about it. I think he blamed me personally.

I defended our system, but two decades later, I see he has a point. The Malaysians have two feets, just like us, and they are standing on them. Because they know they have no choice.

It has served them well.

By comparison, too many of us have put our feets up. We kid ourselves we don’t have to save, when we do. Three million are banking on a Lottery win to fund their retirement, according to a recent survey, while a similar number are hanging on an inheritance. As I wrote this week, you can wave goodbye to that.

We are considerably richer than them

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But guess who’s saving?

I’m not suggesting we scrap the welfare state, by the way. Nor am I suggesting everyone in the UK can afford to save. If you’re in a low-paid job, as millions are, you have enough on your plate coping with rising prices.

Yet too many Brits squander their money on stuff they don’t need, when it could have been put to work in a pension (and if you don’t like pensions, there are always ISAs).

Malaysians have their priorities right. They save because they have to. We have to save as well, but pretend we don’t. As Noel Coward sang: “The smallest Malay rabbit, deplores this foolish habit.”

Only mad dogs and Englishmen don’t save for their future.

Full of holes

There is another reason why we should all start saving like Malaysians. The state can’t provide for us now, and it will only get worse.

As the population ages, there won’t be enough workers to pay our pensions. We’re struggling now, despite borrowing £140 billion every year. The retirement age is already being pushed up to 68.

Given the threadbare welfare safety net, our collective mental backflip is increasingly risky.

You can blame politicians, bankers, tight-fisted employers, whoever, but that’s not what they do in Malaysia. Instead, they take responsibility themselves.

Do it like a Malaysian

The average Briton needs to set aside 12% of their earnings to fund a comfortable retirement, according to Scottish Widows. That’s much more than we are saving now.

The forthcoming auto-enrolment scheme should encourage millions more workers to save, although worryingly, 10% already say they will drop out. They wouldn’t if they were Malaysian.

It is time to stop performing those mental backflips and somersaults. If the Malaysians can stand on their own two feets, so can we.

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