KUALA LUMPUR (March 8): The Armed Forces Fund Board said on Friday that it is still solvent despite concerns raised by the auditor general over its long-running deficit in reserves.
The fund, better known as Lembaga Tabung Angkatan Tentera (LTAT), maintains a solvency position above the threshold required under its dividend policy even when non-cash profits are excluded, according to a statement.
"As a retirement fund, our dividends when declared are non-cash in nature and are credited to members' accounts," the fund said. "LTAT's liquidity position remains stable, ensuring we can fulfil all commitments as they arise."
The statement comes following Thursday's release of the Auditor General's Report on Federal Agencies for 2022. LTAT's reserves stood at a negative RM376 million in 2020, RM258 million in 2021, and RM338 million in 2022.
The report also highlighted 41 old stock portfolios with an unrealised loss of RM662 million as of Dec 31, 2022, contributing to the deficit. Further, the company declared dividends in 2022 partly based on non-cash gains from the divestment of two holdings.
LTAT said the deficit in reserves refers to other comprehensive income reserves, one of three components of its reserves, which track paper gains or losses. When combined with retained earnings and reserve fund, the total reserve position "reflects our financial stability," the fund stressed.
The reserve fund, meanwhile, remains constant, set at 2% of contributors' account balance, "providing a foundation for our financial security," LTAT said. Meanwhile, it expects its unaudited post-dividend combined reserves for FY2023 to see further improvement.
The combined reserves at the end of the financial year 2022 (FY2022) showed a net positive balance of RM160 million, which improved from FY2021, LTAT said.
"This net positive reserve position leads to a book value solvency of above 100%, affirming that our net assets at book value surpasses the total contribution by our members," it said.