Investment assets grew to RM731.11 billion amid low global growth
KUALA LUMPUR, 20 April 2017: The Employees Provident Fund (EPF) today releases its Annual Report 2016, themed “Achieving a Better Future”, which is now available for download from myEPF website at www.kwsp.gov.my. The report revealed a 2.68 per cent rise in annual contributions to RM61.59 billion against total annual amount withdrawn of RM46.80 billion, resulting in net inflows of RM14.79 billion.
The Annual Report, which was tabled in Parliament on 5 April 2017, revealed a 6.81 per cent increase in total investment assets to RM731.11 billion from RM684.53 billion in 2015. The EPF ended the year with RM46.56 billion in total gross investment income with a gross return on investment (ROI) of 7.12 per cent, which was 36 basis points lower, compared with 7.48 per cent in 2015.
The total dividend credited into members’ accounts was RM37.08 billion and the payout amount required for every one (1) per cent dividend rate for the year was RM6.51 billion, which was 8.86 per cent higher, compared with RM5.98 billion in 2015.
Steady performance amid volatilities
EPF Chief Executive Officer Datuk Shahril Ridza Ridzuan said, “Looking back, 2016 saw us operating on the back of a period of low global growth, at the same time navigating between the changes in monetary policies in major economies, the slump in crude oil prices, a weak domestic currency, lackluster corporate earnings and large-scale withdrawal of capital from emerging market economies to developed economies and safe-haven currencies.
“I am pleased that we have been able to announce a dividend of 5.70 per cent dividend for 2016, a commendable performance bearing in mind the challenges amid a difficult investment terrain.”
During a time when the domestic market performed lower than expected, the EPF’s diversified investments allowed it to take profits from other markets. As at 31 December 2016, the EPF’s foreign investments, which constituted 29 per cent of total assets under management, contributed 39 per cent of the total RM46.56 billion gross investment income.
“As we gear up towards becoming a trillion-ringgit fund, we are looking at increasing our exposure to global markets in coming years, in line with EPF’s asset diversification across multiple asset classes, geographies and currencies. The strategy has served us well under adverse circumstances, giving us the flexibility to rebalance our portfolio and take profit from different assets or markets under changing market conditions,” added Datuk Shahril.
Birth of Simpanan Shariah
As a result of the extensive Members Consultation Exercise conducted in 2015, several strategic initiatives were also rolled out throughout 2016. Among others, the EPF now provides an option for members with the introduction of Simpanan Shariah, the first and largest of its kind in the world to offer a fully shariah-compliant retirement scheme.
Upon close of registration on 23 December 2016, a total of 635,037 members had switched from their conventional savings to Simpanan Shariah, with RM59.03 billion from the initial RM100 billion allocation taken up. With about 45 per cent of investment assets being shariah-compliant prior to the introduction of Simpanan Shariah, the EPF now expects to grow these assets by at least RM25 billion a year on average.
“We are of the view that Simpanan Shariah is set to be a significant mover in the Islamic finance landscape, as it is expected to boost demand for Islamic financial products. Moreover, Simpanan Shariah converges with the principles of socially responsible investing, another area garnering momentum in the investment world,” said Datuk Shahril.
In addition, the EPF also introduced several significant enhancements to the EPF Act 1991, with the establishment of Akaun Emas, a second nest egg for members who choose to work beyond age 55 until age 60, as well as the extension of the final age for dividend payment until age 100. Another notable enhancement to EPF policies is the streamlining of withdrawal schemes for foreign contributors (see Attachment 1).
Continuous improvements in core services
As at 31 December 2016, the total number of members increased to 14,806,595 out of which 6,882,983 were active members. Total number of employers contributing to the EPF increased to 540,833. The total number of withdrawal applications increased 21.02 per cent to 2.36million, with 2.27 million approved applications which amounted to RM46.8 billion through various withdrawal schemes.
The EPF continuously seeks to improve the quality of its service delivery for its growing member base, working diligently to reduce counter transactions, to be replaced with online services and mobile applications. As a result, 2016 saw EPF’s online platforms, such as i-Akaun, EPF Kiosks and the myEPF website, continue to emerge as the preferred modes of transaction, with steady growth in user numbers reported on a quarterly basis. It is notable that it has closed the year with 3.93 million i-Akaun registrations, comprising both members and employers.
The e-Pengeluaran facility, which allows members to submit their withdrawal applications online, also recorded a substantial surge in usage, following the inclusion of online Education Withdrawal in December 2015. After Housing Withdrawals, the Education Withdrawal is the second and the latest addition to e-Pengeluaran, which has been further enhanced with the increase in the number of participating banks and higher learning institutions.
Commenting on the theme “Achieving a Better Future”, Datuk Shahril said, “As a retirement savings fund, it is incumbent upon us to help our members retire within a reasonable level of comfort and dignity. It is with this is mind that we have introduced our retirement initiatives, where we aspire to help create a better retirement future for our members, where they are empowered to make financially-informed decisions in line with their own values and desired lifestyles.”
In 2016, a total of 11 Retirement Advisory Service (RAS) counters were opened in several branches, adding to the total number of RAS counters nationwide to 18. Through RAS, members can obtain advice on how they can stretch their EPF savings longer and earn dividends through compounding effect. As at 31 December 2016, a total of 22,000 members had sought advice from RAS.
“We are particularly encouraged that RAS has been recognised by the WorldPensionSummit for innovation in retirement service, for being the first in the region and second in the world to provide independent retirement advisory service that is free of charge, independent and open to all members,” said Datuk Shahril.
The EPF is also planning to expand the outreach of RAS, whereby it is planning to offer Tele-RAS by the end of 2017 to allow the public to obtain financial guidance and advice through its Contact Management Centre, whereas the EPF financial and retirement planning mobile application is targeted to be launched by end-2018.
About the Employees Provident Fund (EPF)
The Employees Provident Fund (EPF) is Malaysia’s premier retirement savings fund to help its members achieve adequate savings for a comfortable retirement. This is in line with EPF’s vision to help members achieve a better future and the mission to safeguard members’ savings and deliver excellent services. The EPF has evolved significantly from transaction-centric to a professional fund management organisation with a strong focus on retirement security. The EPF is guided by a robust and professional governance framework when making investment decisions. It continues to play a catalytic role in the nation’s economic growth and seeks to cultivate a savings and investment culture among its members to improve the country’s financial literacy level.