Frequently Asked Questions

No, savings in SK will continue to be invested in both Shariah and non-Shariah assets. SK will continue to adopt the Environmental, Social and Governance (ESG) principles as extension to EPF’s current investment practices, which includes the practice of ethical and responsible investing.

Similar to any other assets held by the EPF, the proceeds from the sale of an asset is reinvested into other assets that meet the EPF’s investment criteria. The profit derived from the sale is distributed to members as dividend.

Investment exposures to the government are categorised as risk-free, as the principal and coupons are guaranteed by the government. There has never been a default in payment by the government.

Members’ savings are safe. All investments by the EPF are in accordance with the EPF Act 1991 and approved Strategic Asset Allocation. The EPF also practices strict corporate governance. All investments go through a stringent and disciplined screening process, and are subject to a quarterly audit by internal auditors and an annual audit by the Auditor-General.

The majority of loans/ financing provided by EPF are guaranteed either by the Federal Government, the State Government, banks, or through assets, shares or properties. Although there are EPF loans/ financing  non-guaranteed, the decision to invest in that particular loan/ financing is based on several criteria including safety, viability, risk control as well as returns. To date, these types of loans/ financing experienced no problem in meeting its financial obligations.

The EPF's investment philosophy is "prudence" in carrying out the trust placed on them to safeguard EPF members' funds from investment loss risks.  EPF investments are carried out based on strict, comprehensive policies and guidelines and investment approvals are made by the EPF Investment Panel which possesses the expertise and high integrity. In line with that philosophy, EPF funds have never been used to rescue any selected companies as EPF investments are only made based on tight guidelines approved by the EPF Investment Panels including property in order to obtain returns on the investments.

​​​​​​Investment decisions are made through due diligence process which ensures EPF members interests are protected by the EPF Investment Panel. Shariah endorsement shall be obtained from Shariah Advisory Committee of EPF (SAC) for any Shariah-compliant investment to be made under Shariah portfolio.

Members' savings are invested in various investment instruments as follows:

• Malaysian Government Securities and Government Investment Issues (GII)
• Corporate Loans/Financing, debentures, bonds and sukuk
• Shares Money market
• Property

Investment transactions are implemented by officers who have been granted the power to do so under the Delegation of Board Powers to the Chief Executive Officer and Board Officials.

Government bonds or Malaysian Government Securities include:

• Loans guaranteed fully by the Federal Government;
• Bank Negara Malaysia papers with a maturity period of at least three years from the date of issue;
• any commercial instruments (with elements of negotiability) issued by the State Government or local authorities with a maturity period of at least three years from the date of issue; and
• any deposits in advance subscription account under section 26(1)(a)(i)

Equities are shares issued by companies listed on the stock exchange as well as shares which are not listed on the stock exchange.

EPF investments are carried out based on guidelines that were approved by the EPF Investment Panel as well as the Minister of Finance in selected cases.

The EPF Investment Panel is responsible to approve EPF's investment policies.

Each investment proposal will be tabled to the EPF Investment Panel for approval.

The EPF Investment Panel comprises:

• The EPF Chairman
• Representative from Bank Negara Malaysia
• Representative from the Ministry of Finance
• Three professionals from the private sector with wide experience in the areas of finance, trade or other relevant areas
• Chief Executive Officer as Ex-Officio member.
• The members of the EPF Investment Panel are appointed by the Minister of Finance.

EPF does not pay tithe on its investments/ savings.

​​​​​EPF's investments in Malaysia are exempted from tax.

EPF is directly involved in financing national infrastructure projects to provide facilities and amenities to the public such as the Kuala Lumpur International Airport in Sepang, Independent Power Producers projects, highways and Light Rail Transit System (STAR and PUTRA).

Looking at the trend for the past 10 years, it is clear that EPF's asset allocation has undergone several changes particularly in investment in MGS. Investment in this instrument experienced a sharp decline due to lesser new issuance by the Government. As such, the EPF funds had to be invested in other asset classes such as loans, money market instruments, equities and property.

For example, investment in MGS in 1995 accounted for 40.94% of total investment during the year. In contrast, investment in MGS up to 31 March 2005 made up only 39.21% of the overall investment. Apart from that, EPF has increased its investment in the equity sector from only RM10.5 billion in 1995 to RM46.87 billion up to 31 March 2005.

In considering any investment proposal, first, an in-depth study is carried out on the company which has the potential to be invested in. A due diligence exercise will be carried out to determine that the company is strong in terms of financial standing. Information regarding its shareholders and purpose of seeking the financing will also be required prior to presenting it to the Investment Panel. Subsequently, the Investment Panel will thoroughly assess the proposal before the investment approval is given.

As the agency entrusted with its members' savings, EPF maintains a prudent investment policy whereby risks and returns are carefully considered to provide a correct balance to ensure the safety of its members' investment. In-depth studies will be undertaken prior to EPF implementing any type of investment. Investment analysts with the relevant professional qualifications will study in detail the companies which have potential to be invested in. The EPF Management Investment Committee will thoroughly review each investment proposal prior to presenting it to the Investment Panel. The EPF Investment Panel will in turn undertake a detailed assessment of the proposals before approvals are granted.

Money market instruments are papers which can be traded in the money market. They include:

• Negotiable Certificate of Deposits
• Bankers Acceptances
• Repo
• Commercial Papers
• Cagamas Notes

Loans/ financing are debt instrument which involve a lender/ financier and a borrower/customer, used to finance specific purposes whereby the rate of interest/ profit charges are agreed by both parties for a certain period. Loans/ financing are offered with or without collateral.

Debentures are debt security instruments issued by any company as proof of the debt or as security for the total fixed loan/ financing. Debentures include stock debentures, bonds and other securities of the borrower/ customer regardless of whether it has or has not any charge on the borrower/ customer's asset. Debentures usually provide charge on the borrower/ customer 's asset or in the form of security.

Returns on investments are distributed to members via the annual dividend payments.