Retirement Planning Decisions: Analyzing Behavioral Influences on Pension Scheme Selection in Malaysian Statutory Bodies

Since gaining independence in 1957, Malaysia has classified employees in various public services as civil servants. Statutory bodies and local authorities were later established to provide specific public services, and their employees were placed under the Employees Provident Fund (EPF) contribution scheme instead of the government pension scheme due to the lack of constitutional amendments. Following the Harun Salary Commission’s recommendations in 1975, these employees were given the choice between the pension scheme and the EPF scheme, with most opting for the pension scheme. This preference has placed significant financial strain on the government's pension resources. To alleviate this burden, current efforts aim to encourage government servants to choose the EPF scheme and consider placing future recruits under this scheme. This study aims to identify the factors influencing statutory bodies and local authority employees to opt for the government pension scheme despite the availability of the EPF scheme. Utilizing the Life-Cycle Theory to understand general savings behavior and the Theory of Planned Behavior to examine decision-making processes, a quantitative approach was employed. Data were collected via a questionnaire survey with 176 respondents from statutory bodies and local authorities in Kota Kinabalu. The PLS-SEM model was used to analyze the data, testing validity and reliability against Common Method Bias. The results indicated that Subjective Norms and Perceived Behavioral Control positively influenced the choice of retirement scheme, while Attitude did not. These findings highlight the role of social influences and perceived control in retirement decision-making.