KUALA LUMPUR (March 3): Academic Geoffrey Williams has called for a Malaysian superfund to be set up to help everyone, even those with no pension savings at the moment.
Williams is professor and provost for research and innovation at the Malaysia University of Science and Technology.
In a statement on Sunday, Williams said the Employees Provident Fund (EPF) dividend at 5.5% for 2023 was very strong and in line with his expectations of 5.5%-6.0%.
“This is better than last year ,when it was only 5.32%; so [this] shows improvement in performance following a challenging year.
“The dividend payout should be satisfactory for most members, it is higher than a fixed deposit and higher returns with lower risk than ASB at 5.25% for example,” he said.
Williams said 2024 looks no more challenging than last year and will possibly be better.
“So, we can expect a similar return this year, so long as EPF is free to follow its best short-term and long-term strategy without outside interference,” he said.
Malaysian superfund
Williams said the strong financial results also show that if a separate new Malaysian superfund of similar size was set up by combining underperforming government-linked investment companies (GLICs), the returns could solve the civil service pensions problem and even provide a universal basic pension for everyone.
“If the 2024 EPF payout of RM57.8 billion could be achieved from a Malaysian superfund, it would be enough to pay the full civil service liability and provide a RM900 monthly pension for 80% of non-civil servant retirees.
“A new Malaysian superfund could even be run by EPF portfolio managers; then, the returns would be as good as these.
“The sad side is that because of the EPF withdrawals policy, millions of people cannot benefit because their accounts have been depleted,” he said.
Williams highlighted that the EPF had also announced (on Jan 10 this year) a RM708 million government additional contribution incentive to 1.4 million EPF members aged between 40 and under 55, with EPF savings of RM10,000 and below in their Account 1 as of Feb 24, 2023.
“So 1.4 million members will get a dividend bonus of RM500 each from this source, but still they will have virtually nothing in their accounts.
“This is why a Malaysian superfund should be set up to help everyone, even those with no pension savings at the moment,” he said.