Too early to predict aids’ impact on EPF dividends

We have had a diversified investment portfolio since mid-2013 which has helped us a lot, says chief strategy officer


IT IS still early to predict the impact of the i-Sinar and i-Citra programmes on the Employees Provident Fund (EPF) dividends as it would be heavily impacted by market performance.

Its chief strategy officer Nurhisham Hussein (picture) said there are five more months to go, during which the fund must commit to the programmes.

“The programmes are not heavily impacting EPF’s investment at the moment with the fund’s plan in managing its liquidity and cashflow.

“We have sufficient cash for these programmes,” he told a virtual media briefing on the i-Citra update last Friday.

He explained that EPF’s strategic asset allocation (SAA) is taking into account the financial crisis and market downturn, which could withstand future shocks or economic uncertainty.

“Although the domestic market is not doing so well, the international markets are and that will balance out some of the performance issues.

“In terms of managing asset classes and the entire investment portfolio, we do have a plan and so far, it is working,” Nurhisham said, adding that the SAA will be revised every three years.

“We have some practical allocations, depending on market conditions. But it is intended to be over the portfolio and it is not intended to go up and down in the markets.

“We have had a diversified investment portfolio since mid-2013 which has helped us a lot,” he added.

He also said it is unlikely that the withdrawals through the facilities would affect returns to members.

“The withdrawals affect both sides; the amount we need to generate in return is also reduced, so it balances out quite well,” he said.

The EPF has approved 4.57 million applications for the i-Citra facility from a total 4.62 million applications, amounting to RM19.1 billion in withdrawals as of Aug 4.

About 50,000 applications are still pending, while 551 applications were rejected due to factors such as insufficient savings and being above the age limit of 55 years old. The rejection figure also included 82 cancelled applications.

The total number of applications amounted to RM19.3 billion, of which RM19.1 billion worth was approved, while RM2.3 billion had been disbursed as of Aug 4.

The majority of applicants (3.66 million) sought to withdraw between RM4,001 and RM5,000 via i-Citra of which 62% said the purpose was to finance daily or monthly essential expenditure, while 16% said they needed funds to settle outstanding debts.

On the reason for application, 27% said they have faced income reductions, 19% wanted to assist affected spouse/family members while 16% have been unemployed for a long period.

The i-Citra withdrawal facility allows EPF members to withdraw from their respective Account 2 and Account 1, subject to their eligibility, up to RM5,000 spread over five months.

The total outflow due to Covid-19-related assistance offered by the EPF had resulted in an outflow of RM86.2 billion as at Aug 4.

These programmes included employees’ contribution rate reduction between April 2020 and December 2021 (RM6.2 billion), i-Lestari (RM20.8 billion), e-CAP deferment of employers’ contributions (RM200 million), i-Sinar (RM56.7 billion) and i-Citra (RM2.3 billion).

The EPF expected the total estimated outflow following these programmes to amount to RM117 billion.