KUALA LUMPUR (Feb 27): Despite higher withdrawals amid the pandemic, the “market value” of the Employees Provident Fund (EPF)’s total investment assets hit RM1.016 trillion on Dec 3 last year. Yet the provident fund is not celebrating because some 30% or about 1.6 million of its members may withdraw almost all of their savings from Account 1 while another 60% or 3 million members “have or will use up all savings in Account 2”, its outgoing CEO Tunku Alizakri Alias said.
For the record, the EPF’s total investment assets stood at RM998 billion at the end of 2020, up 7.9% from RM925 billion at the end of 2019. The EPF wrote down RM7.71 billion from its listed equity portfolio as part of its prudent stance to maintain a healthy portfolio, he told reporters at a virtual briefing in conjunction with its 2020 dividend announcement today.
Alizakri did not specifically say, however, if the EPF expects to become a RM1 trillion fund this year. In his presentation, he noted that some RM130 billion in funds had been and are still being released to members and employers via various schemes to alleviate Covid-19 related hardships since last year.
The RM130 billion released into the economy include an estimated RM90 billion for i-Sinar Account 1 withdrawals, RM20 billion from the i-Lestari Account 2 withdrawals, RM13.6 billion from the reduction in contribution rates that increased its members’ disposable incomes and RM85 million in deferred contributions for employers seeking respite in terms of cashflow. It is not immediately certain, however, how much of the RM90 billion mentioned for i-Sinar has been disbursed to members or if that figure is an estimate or the actual amount of withdrawals that had been asked by EPF members to date. This could not be immediately clarified at the time of writing.
The EPF, which gets a steady net inflow of about RM1.7 billion a month before the Covid-19 pandemic hit, said its total asset base had grown at a 11.2% compounded annual growth rate (CAGR) since 1965.
In his virtual presentation to the media, Alizakri said the EPF still saw RM20.1 billion net inflow in 2020 despite the pandemic, even though this was 35.4% lower than the RM31.1 billion net contribution received in 2019. Net contributions fell even as withdrawals rose 30.1% year-on-year to RM58.3 billion on the back of only 3.3% year-on-year increase in contributions to RM78.4 billion in 2020.
With increased withdrawals and reduced contributions amid Covid-19, it is no surprise that Alizakri said the savings adequacy of more of its members are expected to deteriorate due to Covid-19.