Members’ basic savings threshold recorded a drop from 36% to 27% as a result of the Covid-19-related withdrawals

by NUR HANANI AZMAN / pic by MUHD AMIN NAHARUL

UP TO 46% members of the Employees Provident Fund (EPF) below the age of 55 are having less than RM10,000 in their account, raising concerns on the sufficiency of their funds upon retirement.

The EPF also stated that the members’ basic savings threshold (RM240,000 at age 55) recorded a drop from 36% to 27% as a result of the Covid-19-related withdrawals to supplement their income during the crisis.

CEO Datuk Seri Amir Hamzah Azizan said the pandemic has also triggered a dramatic rise in the number of gig workers in the country, and while that has helped workers survive, many of these workers are falling back on their retirement security due to the irregular and unstable income.

“Additionally, they are facing vulnerabilities in terms of employees’ benefits and coverage on social protection. There will be far-reaching repercussions not only on their future wellbeing, but also on the government, who will have to carry that financial burden.

“The key element of the EPF’s strategy going forward is to get the gig workers, as well as those in the informal sectors, into the EPF scheme so they can start to save as early as possible and plan for their retirement,” he said, adding that a coordinated solution for the longer term is needed to ensure better social protection for all Malaysians.

He said EPF’s focus is to help members restore and rebuild their retirement savings to ensure that they are able to secure a dignified retirement.

“We will remain focused on our Strategic Asset Allocation and continue to be cognisant of the risk profiles of the markets as they develop so we are able to shift along the way.

“While we are doing that, our fundamental purpose of providing returns and protection for our members’ future wellbeing will continue to be preserved,” he added.

The EPF recorded RM34.05 billion of total investment income for the first half of the year ended June 30, 2021 (1H21), an increase of RM6.79 billion, or 25%, compared to RM27.26 billion in the corresponding period in 2020.

Total gross investment income (GII) for the second quarter 2021 (2Q21) was RM14.77 billion, RM350 million lower than RM15.12 billion recorded in the same quarter last year.

Equities continued to be the main contributor of income for 2Q21 at RM7.89 billion, accounting for 53% of total GII.

As part of its internal policy to ensure a healthy portfolio, the EPF has adopted cost write-downs on listed equities.

In 2Q21, RM210 million was written down for listed equities, compared to RM1.66 billion in the same quarter in 2020 following the continued recovery across global markets.

After netting off these write-downs, a total of RM14.56 billion of investment income was recorded in 2Q21, 8% higher than the RM13.46 billion recorded in 2Q20.

Fixed Income instruments continued to contribute a stable income of RM5.28 billion, or 36%, to the GII in 2Q21. This was lower compared to the RM6.17 billion recorded in 2Q20 due to lower trading gains. This is in line with higher interest rates in 2Q21, compared to the corresponding period last year.

As at end June 2021, the EPF’s investment assets stood at RM989.14 billion, of which 37% was invested overseas. In 2Q21, overseas investments generated an income of RM8.71 billion, 59% of the total GII recorded.

Meanwhile, he said the EPF launched the i-Sinar and i-Citra facilities which were intended to provide some financial relief to assist members affected by the pandemic.

“To date, this has involved the disbursement of a total of RM67.6 billion.

“About 89% of applicants under i-Sinar and 86% under i-Citra stated that the withdrawals were used for daily expenses or urgent financial needs,” he said.