Restructure LTAT now to keep dividends flowing

Project Moonshot had a short lifespan before it was discontinued but LTAT cannot afford to delay this restructuring.

PROJECT Earth is a down-to-earth name for the overhaul of LTAT, the acronym for the Armed Forces Fund Board, which manages military pensions.

Previously, under LTAT’s 2023-2025 strategic plan, the initiative was called Project Moonshot.

However, without knowing the state of mind of those who conceived and named the initiative, it’s hard to say what were they thinking.

We can only assume that foremost on their minds would have been how to get rid of entrenched interests that have led LTAT into the dire state of finances it faces today.

Surely, a sisyphean task that can never be completed.

Under the more “earthy” plan, it was shared by the defence minister in Parliament earlier this week that the main objective is to establish a clearer definition of operations between LTAT and its wholly-owned subsidiary, Boustead Holdings Bhd, which was delisted in June 2023.

From what is understood, this entails focusing on better efficiency and productivity across the subsidiaries held by either LTAT or Boustead.

According to LTAT’s annual report for the financial year ended Dec 31, 2023 (FY23), its assets under management stood at RM13.03bil, up from RM10.32bil in FY22.

There is a real urgency to ensuring that Project Earth takes off (but not to the moon) and is managed well in its implementation as it involves the welfare of some quarter-million members, both active military personnel and retirees.

While LTAT declared decent dividends in 2023 and 2022, questions have arisen – despite the declaration of a solid financial position – about where the funds to pay the dividends came from, which at 5%, were double that of 2019.

At the core of the restructuring is the effort to mitigate risks by relying less on Boustead, which owns a good chunk of the assets.

So, yes, pensions are at stake.

Project Moonshot had a short lifespan before it was discontinued but LTAT cannot afford to delay this restructuring.

As recently as last November, even after LTAT and Boustead completed the deal to sell down their stakes in Affin Bank Bhd to the Sarawak state government, Parliament’s Public Accounts Committee chairman Datuk Mas Ermieyati Samsudin warned that LTAT was in danger of losing RM5bil in value.

Such a loss would make it increasingly difficult to pay out decent dividends, especially in these times of high living costs.