No funding woes, says EPF chairman, but excuse me if I take it with a large pinch of salt! Based on what board chairman Tan Sri Abdul Halim Ali said, the fund grows by RM 20 billion a year, of which RM 10 billion is net contribution (i.e. less withdrawals). With the fund now in excess of RM 219 billion, that means a return of 5% from last year (I am just approximating mathematically), accounting for the dividend of 4.25%. That means 0.75% was retained (amounting to RM 1.64 billion) for what? Take the basic rule of return on investments, retained "profit" in this sense should yield more that the cost of capital (in this case, the expected return for using my money - the 0.75% that I shoud have received but deferred) which is more that the 4.25% plus the premium for timing delays. Yet dividends have been dropping since 1998!
I know this is simple accounting. So prove me wrong. I am not against protecting the future of retirees, mind you. A structured withdrawal program that will help manage their stipend while allowing them to make the necessary large investments (house, small business etc.) without undue problems. What I do not agree with is the use of this as an excuse for poor stewardship! The rakyat should be convinced of this rather than made (privately or otherwise) to swallow everything the EPF or Govt says without question.
Given the people's anger and disbelief, I belief an independent audit of EPF's investments and financial commitments should be conducted immediately. I would like to know where our money did not make returns and why this was so. Our money is not intended to fund the extravagances of a select few and we should not be made to pay for the mistakes of the same individuals. I am angered by EPF's claim that a majority of individuals lose most of their savings within years of withdrawal, and in turn they will probably do the same for us - wholesale! You want to know which way my vote is going? I am going to vote for the govt who promises to show us the big picture.
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