The Employees Provident Fund (EPF) will be forced to liquidate its assets and rebalance its portfolio to make billions of ringgit in funds available to depositors in need of cash to buffer the economic impacts of the Covid-19 pandemic.
The EPF is estimating that both its i-Lestari and i-Sinar emergency schemes will see roughly RM45 billion pulled out by the end of next year, as eligible members are granted early access to their retirement savings.
Additional reductions in the contribution rate over the past eight months have seen the EPF lose another RM8 billion in opportunity cost for 2020 and a further RM9 billion estimated for 2021, bringing the total cash flow implication on the pension fund to RM60 billion.
EPF CEO Tunku Alizakri Raja Muhammad Alias did not provide details about the liquidation plan but said the fund would look at assets that “best suits” its long-term strategy.
Chief investment officer Rohaya Mohammad Yusof said the asset sell-off plan had been put in motion since March to ensure that the EPF had sufficient funds early on.
In 2019, the EPF declared total dividends of RM45.82 billion of which RM41.68 billion (5.45% dividend) was for conventional savings and RM4.14 billion (5%) for shariah savings. This was lower than the RM47.3 billion declared for 2018 and the RM48.13 billion announced for 2017.
It has been suggested that the EPF would need at least RM46 billion in investment income to keep dividends above 5% for 2020 when it announces the annual payout in February or March next year.
Meanwhile, P. Gunasegaram in the theVibes.com on 19 November 2020, suggested it as a RM60 billion scam.
Chronology of events:
1. The RM60 billion scan at EPF, P. Gunasegaram, theVibes.com, 19 Nov 2020
2. EPF to sell off assets to get cash upfront, Alifah Zainuddin, The
17 Nov 2020