EPF : Stuck between a rock and a hard place

By ZAIDI ISHAM ISMAIL
editor@dagangnews.com

KUALA LUMPUR Sept 27 - Almost all Malaysians dream of having a good job and a comfortable retirement. This is what the Employees Provident Fund (EPF) has been striving for all this while - to provide providence for all pensioners who contribute to its scheme.

But COVID-19 has put a dent on this, railroading EPF's plans to ensure the working population has sufficent savings in their twilight years.

EPF very much wants to grow its pension funds but at the same time has its wings clipped by the government's directive to allow contributors make withdrawals to help them tide over the difficult times.

But despite all the withdrawals, EPF performed admirably well.

One of the world's top ten provident fund turned in an investment income of RM35 billion last week for the first six months of 2021, an increase of 25% compared to 2020.

This is despite the RM67.6 billion withdrawn by Malaysians under the i-Sinar and i-Citra withdrawal facility to help Malaysians face the pandemic.

However, all is not well as 49% of total contributors have less than RM10,000 in their accounts.

Universiti Putra Malaysia Putra Business School Associate Professor Dr Ahmed Razman Abdul Latiff said loking at the investment income growth for EPF in the first half of 2021, he was confident that EPF can still afford to generate reasonable return on investment for their contributors as well as cater to their withdrawal needs. 

"EPF probably require around RM10 billion this year for every 1% of dividend.

Since they are expected to at least generate a minimum RM70 billion gross income by the end of this year, they can still give at least 5% of dividend for 2021 assuming RM50 billion to be given out as dividend from the total gross investment. 

"Even though EPF has to date disbursed RM67.6 billion to assist members affected by the pandemic via i-Sinar and i-Citra, around 46% of these eligible members only have less than RM10,000 in their EPF accounts, so we will not expect another major withdrawal from the members throughout the remaining months of 2021. 

He added EPF always generated a surplus of between RM20 billion to RM30 billion every year and so this amount is enough to help EPF to continue its focus on its Strategic Assets Allocation with the main objective of generating higher return on the investment for its members.

Admittdely EPF is wedged between a rock and a hard place.

On one end, it wants to expand its wings and soar to enhance contributors savings.

But on the other end, the government-owned EPF has to kowtow to the political masters of the day.

Yes, indeed  EPF is stuck between two hard surfaces and its damned if it does, and damned if it does not.

But in the meantime, EPF which has almost RM1 trillion in assets must devise a plan on what it wants to do next to balloon its income as well as help Malaysians tide the difficult times.

Until this is all over and the virus tapers off, all that EPF can do for now is to bite the bullet. - DagangNews.com