EPF set to be trillion ringgit fund

Alizakri: It will be very soon actually that we would be a trillion ringgit fund, so the real challenge is in the management of the money of our members.

KUALA LUMPUR: The Employees Provident Fund (EPF) is growing substantially and is poised to become a trillion ringgit fund, said CEO Tunku Alizakri Alias during a panel session at the Invest Malaysia 2019 event here.

“It will be very soon actually that we would be a trillion ringgit fund, so the real challenge is in the management of the money of our members,” he said yesterday.

He said that the EPF was growing at a strong rate with a net increase in its contributions of up to RM1.9bil per month.

“We have a problem which I think a lot of people would like to have: we are flushed with cash and are growing every month on a net basis increase of RM1.5bil to RM1.9bil.

“But cash can be a drag at the end of the day,” he said at the forum.

“At this point of time, about 38% of our assets are actually overseas and from our perspective, we think it is good to push more investments outside.

“But for now, we are faced with constraints from Bank Negara, which is totally out of my control in a certain sense,” he added.

The EPF also said that despite that, it faces challenges amidst the development of a newer economy called Industry 4.0.

“The younger generation sometimes misconstrue that the EPF is a kind of tax and it is not something that is welcomed.

“They say that they would like to have as much money in hand as possible,” Alizakri said.

“The total labour force in Malaysia that was covered under the EPF was about 48% when I first joined here five years ago.

“I had a look at the recent numbers and this has already come down to 40%. In a space of five years, it has already come down from 48% to 40%,” Alizakri said.

He said that the changing sentiment among the younger generation would mean that the fund would need to find ways to remain relevant.

“In the future, people may say that they may not want to put their money into the EPF: contributions-wise it might go down.

“As more and more people retire as we become an ageing nation, they will be more incentivised to take out money from the EPF,” he said.

“We have to compete with the cost of living, for example, while for the retirees, we have to tell them not to take their money out all at one go,” he added.