Will enhanced i-Saraan incentives for Malaysia’s gig economy workers secure their future?

By: Dr. Cheah Chan Fatt

In the recent announcement of the 2025 Budget, the Malaysian government unveiled a substantial enhancement to the i-Saraan program. This improvement entails increasing incentives from 15% to 20%, with a maximum annual contribution of RM500. The primary objective of this initiative is to promote retirement savings among informal workers and individuals with variable incomes, particularly those engaged in the gig economy. This strategic move is particularly significant in light of Malaysia’s rapidly ageing society and the financial challenges confronting self-employed and gig economy workers.

The gig economy in Malaysia has witnessed significant expansion over the past decade, attracting a substantial portion of the workforce, including young adults and individuals seeking alternative employment arrangements. While offering flexibility and independence, this sector presents several challenges, particularly regarding financial security and retirement planning. Gig workers often lack the benefits and protections associated with traditional employment, such as employer-sponsored retirement plans, health insurance, and job security, leading to financial instability and hindered ability to save consistently for the future. Recent data underscores the limited participation of gig workers in Malaysia’s Social Security Organization (SOCSO), underscoring the necessity for tailored solutions to support this growing segment of the workforce.

As Malaysia’s population ages, the significance of amassing sufficient retirement savings cannot be overstated. The anticipated rise in healthcare and long-term care costs underscores the essential need for individuals to possess adequate funds to support themselves during their later years. Many gig workers may face challenges affording necessities and healthcare in old age without proper savings. The i-Saraan program, administered by the Employees Provident Fund (EPF), aims to address this issue by providing a platform for informal workers to save for retirement. The program offers a government incentive to match a percentage of the contributions made by participants, thereby encouraging more people to save.

The recent increase in incentives for the i-Saraan program represents a strategic effort to stimulate participation and savings among gig workers. By raising the matching contribution from 15% to 20%, the government aims to enhance the attractiveness and benefits of the program. This enhancement implies that for every RM100 contributed by a participant, the government will add RM20, up to a maximum of RM500 annually. This increase in incentives is expected to yield several positive impacts: higher incentives are likely to attract more gig workers to join the i-Saraan program, increased participation will assist more individuals in building a financial cushion for their retirement, and more significant savings will encourage participants to contribute more regularly and consistently. By accumulating more savings, gig workers can attain heightened financial security in their retirement years, reducing their reliance on government assistance and family support.

Malaysia’s ageing population significantly challenges the country’s social and economic systems. With the anticipated increase in the proportion of elderly citizens, there will be heightened demand for healthcare services, long-term care, and social support. Ensuring that all workforce segments, including gig workers, are financially prepared for retirement is imperative in addressing these challenges. The i-Saraan program, with its enhanced incentives, plays a pivotal role in this context. By encouraging gig workers to save for retirement, the program helps alleviate some of the pressures associated with an ageing society. It promotes a culture of financial responsibility and long-term planning among informal workers.

While enhancing the i-Saraan program represents a positive step, additional measures can be taken to support gig workers further and ensure their financial well-being. Enhancing awareness about the i-Saraan program and its benefits is crucial, as many gig workers may not know how to participate. Targeted campaigns can help bridge this knowledge gap. Simplifying the process of enrolling in the i-Saraan program and making contributions will encourage more gig workers to participate. In addition to the matching contributions, other incentives such as tax breaks or additional government grants could further motivate gig workers to save for retirement. Developing a broader social protection framework encompassing health insurance, unemployment benefits, and other safety nets for gig workers will provide a more holistic approach to their financial security.

The increase in incentives for the i-Saraan program represents a commendable initiative addressing the unique challenges that gig economy workers face in Malaysia. As the country grapples with an ageing population, ensuring that all workers, including those in the informal sector, are financially prepared for retirement is crucial. By enhancing the i-Saraan program, the government is taking a proactive stance in supporting the financial well-being of gig workers and addressing the broader societal implications of an ageing population.

The author is a Research Fellow at the Ungku Aziz Centre for Development Studies (UAC), Universiti Malaya.