Corporate: Organisation Governance

We believe a sound corporate governance framework supported by strong leadership and good management practices contribute to enhanced accountability and transparency. We will continue to focus efforts in raising awareness and the adoption of good corporate governance.

As Malaysia's largest savings institution with assets exceeding 1 trillion, we strive to be at the forefront in championing sustainable investments by incorporating Environmental, Social and Governance (ESG) principles in our investment considerations. Doing so enhances the social protection of our members so that they and future generations of EPF Members, have a sustainable retirement future.

The EPF is committed to ensuring the standard of corporate governance are practiced throughout the organization in line with its role to protect members' retirement savings. The EPF's corporate governance standards were drawn from various best practices, particularly from the following reference:

EPF Integrity & Anti-Corruption Plan

EPF Sponsorship and Donation Policy

Malaysian Code for Institutional Investors 2014

EPF Anti-Corruption Statement

Corporate Governance Guide

Malaysian Code on Corporate Governance

EPF Anti-Corruption Policy

Board and Investment Panel

In line with good governance, members of the Board and the Investment Panel, as well as the Chief Executive Officer (CEO), are appointed by the Minister of Finance through a rigorous selection process every two years. Only those with proven records of integrity, competence, and reliability to effectively carry out their duties will be appointed. Additionally, there must be diversity in terms of skills, knowledge, industry background, ethnicity, and gender to achieve optimal performance by the Board and the Investment Panel in executing their duties.

Minister of Finance (Government)

Corporate (Governance - Board & Investment Panel) Accordion

Board Committees

The Board and Investment Panel have established various committees to oversee specific matters pertaining to organisational operations.

Board Audit Committee

Assists the Board in evaluating the effectiveness of internal controls, risk management (except in making investment decisions) and governance processes.
Oversees the financial reporting process and reporting quality of the annual and interim financial statements.
Reviews the appropriateness of the EPF’s accounting policies and changes thereto.
Maintains a formal and professional relationship with the external auditors and convened two meetings with external auditors in 2017 without the presence of the management.

Terms of Reference

Board Risk Management Committee

Assists the Board to oversee all operational risk management activities (except for making investment decisions).

Investment Panel Risk Committee

Oversees investment risk, which includes recommending the aggregate risk appetite for the Investment Panel to sign off, approving risk management policies and limits, reviewing risk exposure and providing direction in relation to risk management practices within the investment functions.

Finance and Development Committee

Approves additional budget of not more than five per cent from the total annual budget approved by the Board.
Assists the Board in approving matters relating to financial impact such as write-offs of loss other than in relation with investments.

Strategic Committee

Reviews in detail proposed amendments and policy changes related to the EPF Schemes.
Endorses any recommendations and policy changes to the Board for approval.

Personnel, Appointment and Services Committee

Assists the Board to consider and approve matters relating to employment, which includes employment terms and conditions.

Board Disciplinary Committee

Responsible for any disciplinary proceedings and imposes penalties on employees as provided for under the EPF Rules and Regulations (Conduct and Discipline) 1993.

Board Disciplinary Appeal Committee

Considers any appeal by employees against the decisions made by the Disciplinary Committee.

Procurement Board Committee

Responsible for matters relating to the procurement of works, services and supply of goods.

Shariah Governance

Apart from adopting good corporate governance practices, the EPF has also established a Shariah governance framework to ensure that the operations and investments of Simpanan Shariah comply with the Shariah principles

Shariah Governance Structure

Board

Establishes the SAC as the authority on shariah matters, for the purposes of advising the Board and Investment Panel in ensuring that the management of Simpanan Shariah complies with the shariah principles.
Refers to the SAC on any matters relating to shariah and that which requires the ascertainment of shariah principles. The advice given by the SAC shall be binding on the Board.
Establishes a shariah compliance framework.

Investment Panel

Refers to the SAC on any investment matters relating to shariah and that which requires the ascertainment of shariah principles. The advice given by the SAC shall be binding on the Investment Panel.

Shariah Advisory Committee

Ascertains the application of shariah principles on any matters relating to Simpanan Shariah.
Advises the Board and Investment Panel on any shariah-related matters and the application of shariah principles related to Simpanan Shariah.
Verifies and approves any shariah compliance report in relation to the management of Simpanan Shariah for the EPF Annual Report.

Management

Establishes the SAC as the authority on shariah matters, for the purposes of advising the Board and Investment Panel in ensuring that the management of Simpanan Shariah complies with the shariah principles.
Refers to the SAC on any matters relating to shariah and that which requires the ascertainment of shariah principles. The advice given by the SAC shall be binding on the Board.
Establishes a shariah compliance framework.

Shariah Compliance Framework

There are four functions established by the Board under the framework:

Shariah Research and Advisory: Responsible for conducting Shariah research and providing shariah advice.
Shariah Monitoring and Review: Responsible for shariah compliance monitoring and review for the purpose of continuous assessment on the degree of shariah compliance.
Shariah Risk Management: Responsible for the management of shariah non-compliance risk for the purpose of mitigating any possible shariah non-compliance.
Shariah Audit: Responsible for Shariah auditing for the purpose of independent periodical assessment and objective assurance on the degree of Shariah compliance.

Communication with Stakeholders

At the EPF, we value our transparency, aligned with our corporate governance framework. Through our quarterly reports, we disclose investment activities comprising information which includes allocation, revenue from each asset class, total fund size and the outlook for the following quarter. We also disclose our top 30 equity investments quarterly to provide information on our holdings in Malaysia's public listed companies.

In line with advancements in information technology, we have developed and enhanced our website to facilitate easy and interactive access to information regarding members' account. Through i-Akaun (Member), members can access their EPF statements, check withdrawal application status and update their profile. Whereas employers can utilise the i-Akaun (Employer) to register employees, submit online contributions and check on contribution details.

We hold dialogues as well as attend and vote in annual general meetings (AGM) and extraordinary general meetings (EGM) of our investee companies. We have appointed nominees on the boards of listed and unlisted companies, to ensure that the EPF's interests are taken into consideration.

Internal Control and Risk Assessment

Our Board and management are fully committed to a robust internal control system, procedures and policies to ensure stakeholders’ interests and the EPF’s assets are fully protected.

Control Environment

A controlled environment and positive work culture sets the tone of our organisation. It sets the foundation for all other components of internal control, providing discipline and structure.

Relevant key activities include:

Terms of reference
Organisational structure
Human resources policies and procedures
Culture of integrity

Risk Assessment

Our risk assessment involves a dynamic and ongoing process of identifying and assessing risks that may hinder the achievement of our objectives.

Relevant key activities include

Corporate Risk Scorecard (CRS)

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