‘EPF MUST EVOLVE TO STAY RELEVANT’

Rise of freelance economy and ageing population changing country, says CEO

THE Employees Provident Fund’s (EPF) business strategies need to evolve in order to remain relevant. Chief executive officer (CEO) Tunku Alizakri Alias said EPF’s traditional way of acquiring funds was slowly going out of fashion.

“Gone are the days when EPF can sit pretty and just wait for members’ contributions. The Malaysian demographics are changing with the rise of a freelance economy and an ageing population,” he told a panel at the Invest Malaysia 2019 forum, here, yesterday.

“Just five years ago, we had 48 per cent of workers contributing to the EPF. Latest data show that the percentage has now gone down to 40 per cent. That’s a drastic drop.”

He said most young people misconstrued EPF as another tax agency and was not interested in saving money with the fund.

Tunku Alizakri is also concerned that more than 15 million people will be reaching retirement age soon.

“As the workforce reach retirement age, there are concerns that they will come out to make huge withdrawals. This means that EPF might be facing a situation whereby we won’t have cash to supplement the withdrawals.

“In fact, there might be a day that the EPF might not exist anymore.”

The pension fund has RM833.76 billion worth of investment assets, of which 26.7 per cent, or RM222.61 billion, are invested overseas.

The United States and the United Kingdom top the list for overseas investments at RM33.35 billion and RM25 billion, respectively.

“Our fund is so huge that we’re going to hit RM1 trillion in assets under management in the next few years.

“That’s why we need to get outside Malaysia and partner with international investors looking to enter Asean,” said Tunku Alizakri.

EPF is an ideal partner given that it is protected from political meddling, thanks to the Employees’ Provident Funds Act.

“The Act prevents politicians and former politicians from meddling in our investment strategy.”

The EPF posted a gross investment income of RM50.9 billion for the financial ended December 31, 2018.

Forty per cent of the income generated was from overseas investments.

PIC BY MOHAMAD SHAHRIL BADRI SAALI (From left) Retirement Fund Inc chief executive officer Syed Hamadah Othman, Employees Provident Fund CEO Tunku Alizakri Alias, Khazanah Nasional Bhd managing director Datuk Shahril Ridza Ridzuan and Permodalan Nasional Bhd CEO Datuk Abdul Rahman Ahmad at the Invest Malaysia 2019 forum in Kuala Lumpur yesterday.