By Zaidi Isham Ismail
THIS past week, the Employees Provident Fund (EPF) took center stage on social media, print or electronic media. The provident fund announced contributors affected by COVID-19 are allowed to withdraw an "advance" as much as RM60,000 from their pension savings account.
Naturally, the rakyat who are EPF members rejoice with the news as though there is no tomorrow, acting like its free lunch money.
Never mind that. As long as the rakyat is happy able to withdraw part of their hard earned savings amid this devastating disease, the hoi polloi deserve to celebrate.
This cash will ease part of their gloom away albeit for a few months until the advance is depleted too unless they invest in income generating instruments.
But never mind that. Amid this piece of good news, detractors will continue to rear their ugly heads.
EPF chief executive officer Tunku Alizakri Raja Muhammad Alias said in order to distribute the future pensioners their advance, EPF needs to liquidate some of its assets.
One smart alec wrote on his social media account : "Told you EPF has no money. They need to sell assets to give back our money," said this seriously misinformed contributor.
Even a former prime minister was puzzled by Alizakri's statement.
"Why does the EPF need to sell its assets?"
The EPF does not keep depositors' money under the pillow.
There is no 2-meter thick vault in EPF's basement either to keep the cash.
In his Facebook posting, Media Prima executive director Mustapha Kamil penned :
EPF tu tak simpan duit yang kita carum tu dalam laci. Dia beli harta lah supaya ada pulangan.
Pulangan itu lah yang kita tiap-tiap tahun dapat dividen tu.
Kalau dia simpan dalam laci nanti tak ada dividend sebab duit kertas, duit siling atau cek tak boleh beranak-pinak dalam laci.
Spot on chief.
So much so, that some portion of the rakyat question why EPF has to sell its assets to pay contributors the advance. For starters, let's take a look at how EPF manages the rakyat's money.
EPF invests in the stock market
EPF is one of the world's top five largest provident fund in the world. It handles some RM800 billion worth of pension savings from some 10 million working Malaysians. Out of that RM800 billion, some 30% is invested in equities or the stock market.
EPF has a team of over 30 fund managers who manage contributors money and invest in good stocks. As an example, rubber gloves are a good buy right now and so the EPF will invest in COVID-19 related stocks to make money for members.
So if the stock market moves up, EPF will make some money too. And this return on investments will trickle back to our dividends.
EPF invests in government bonds
EPF also subscribe to the Malaysian government securities or government bonds. What this means is that the government will use part of EPF's savings and invest in projects which give returns. This include infrastructure and development projects.
Don't worry, the government bonds are government guaranteed. Meaning the government will pay back EPF every sen.
EPF invests in properties
Some 20% of EPF's assets are invested in property both inside and outside the country. EPF own properties such as in Malaysia, Australia and the UK. If the property is rented out or sold, some of the profits will be absorbed back to EPF members.
It is true that some members of our society are full of suspicions and prejudice preferring to jumping to conclusions.
In future, please do some homework before shooting from the hips. - DagangNews.com
The writer is former NST Business assistant editor