EPF Says Needs to Sell Assets to Fund Depositor Withdrawals

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The Employees Provident Fund will continue to sell off its assets to make funds available to depositors who are withdrawing from their Account 1 and Account 2.

The exercise was first put in motion in March.

The EPF is estimating that withdrawals under the i-Sinar and i-Lestari schemes will see about RM45 billion exit the retirement fund by next year.

Reductions in contributions this year and next year raises the total cash outflow to about RM60 billion, the Malaysian Reserve reported.

“For now, it is just a matter of enhancing the strategy, meaning (we will look at) whether there is a need to rebalance our assets.

“As far as we are concerned, the strategic asset allocation (SAA) will continue to be the prime drivers. We are also very cognizant about any impacts to the market,” said EPF chief investment officer Rohaya Mohamad Yusoff.

The fund’s CEO Tunku Alizakri Raja Muhammad Alias did not provide details for the liquidation plan, other than that they have the long-term in mind.

He also declined to comment on dividends for 2020, saying only that the fund’s mandate was to deliver at least a 2.5 percent nominal dividend and beat inflation by about two percent on a rolling three-year basis.

“I think people forget that there is no such thing as a free lunch. For every amount of money that we give access to our members, it also means less money for us to invest.

“These are unprecedented times of high-quality assets with very low valuations. When more money is taken out and becomes unavailable, the trade-off is we will lose an opportunity,” Tunku Alizakri said.

Under the i-Lestari scheme, contributors could withdraw RM500 per month up to RM6,000 from their Account 2.

The i-Sinar scheme allows those who lost their jobs, were given no-pay leave, or have no other source of income to withdraw up to 10 percent of their Account 1 savings, as long as they leave a minimum of RM100 in their accounts.

Critics have questioned why the government isn’t digging into its own coffers to help the people, instead of asking EPF depositors to dip into their own retirement savings. – Malaysiakini