save malaysia!
EPF profits spread thin By V. THOMAS
savemalaysia
Publish date: Fri, 21 Jan 2022, 08:58 AM
LETTERS: The Employees Provident Fund (EPF) should be reformed to reflect the spirit and changes of the times.
The main issues are the low salaries and contributions of B40 households and some M40 households, and the wide gulf between those getting high and low salaries.
The gap is the main reason why the country has one of the worst income gaps in the world, according to the Gini coefficient analysis.
The government, EPF and workers should take note of a former prime minister's suggestion about dividends.
EPF gives five to seven per cent annual dividends as compared with two to three per cent interest by commercial banks.
What happens is that the dividends EPF gets have to be spread thinly over the trillion ringgit fund.
If EPF were to manage a smaller fund, it could declare dividends of at least 10 percent annually as its investments in blue chips, equities and shares give a yield higher than the roughly five per cent it declares every year.
Due to the billions not invested and the huge size of the fund, EPF profits are spread thin, hence the smaller dividends.
This affects the low-income group as its accumulated amount snowballs slowly and it affects the total amount when they retire.
It is better to restructure the dividend payment scheme whereby contributors with less than RM500,000 be paid five to 10 per cent dividend, those with RM500,000 to RM1 million get three per cent, and those with more than a RM1 million get less than three.
Pension funds in some countries take more risks and can influence bourses and bond markets and increases profits.
This is not the case with EPF, which acts under different constraints.
Restructuring the dividend payment system will benefit the millions of poor contributors.
V. THOMAS
Sungai Buloh, Selangor
https://www.nst.com.my/opinion/letters/2022/01/764701/epf-profits-spread-thin
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Discussions
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Helping the not so well being EPF contributors should come in other forms such as restructuring the economic structure, upgrading skills, more high added value employment opportunities etc to help improve contributor's earning and as such higher EPF contribution.
2022-01-21 09:35
BS article .excuse for Gov to dip into EPF
1 YOU CANNOT LEGISLATE THE POOR INTO PROSPERITY BY LEGISLATING THE WEALTHY OUT OF PROSPERITY
2 WHAT ONE PERSON RECEIVES WITHOUT WORKING FOR,ANOTHER PERSON MUST WORK FOR WITHOUT RECEIVING.
3 THE GOVERNMENT CANNOT GIVE TO ANYBODY ANYTHING THAT THE GOVERNMENT DOES NOT FIRST TAKE FROM SOMEBODY ELSE.
4 YOU CANNOT MULTIPLY WEALTH BY DIVIDING IT.
5 WHEN HALF OF THE PEOPLE GET THE IDEA THAT THEY DO NOT HAVE TO WORK,BECAUSE THE OTHER HALF IS GOING TO TAKE CARE OF THEM,AND WHEN THE OTHER HALF GETS THE IDEA THAT IT DOES NO GOOD TO WORK,BECAUSE SOMEBODY ELSE IS GOING TO GET WHAT THEY WORK FOR,THAT IS THE BEGINNING OF THE END OF ANY NATION
2022-01-21 10:14
Implementing the dividend tier may cause significant outflow from EPF and may cause catastrophic impact to the market and may be more detrimental to the so called "poor" contributors! Per EPF Annual Report 2020, there are ~7.6M active members with total saving of ~$721B.
Member with $500K and above stood at 207,669 with total saving of !$198B. This is ~2.47% percent of the active members and ~27.41% of the total saving.
Should EPF implementing lower dividend at 3% or less for saving >=$500K, I believe this group of member will opt out of the EPF and park their money elsewhere as their saving are equally hard earned. As a matter of fact, we need to be prudent in financial planning in order to build up saving in EPF as well as on our own!
2022-01-21 11:07
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The writer suggestion seems like Robinhood, "robbing" the rich and "rescue" the not so rich. Every EPF contributor works hard to make a living and contribute towards the retirement fund fairly according to their earning capability. Their contribution should be treated equally in respect on dividend to be received. Else, contributor should have a choice to park their retirement fund somewhere else to earn higher return.
2022-01-21 09:33