EPF: Private sector management without political interference

While a BT email poll on the proposed private management of the Employees Provident Fund (EPF) revealed mixed views from the public, most respondents said that even if private management is entertained it shouldn’t be politicised.

Last month, unions representing both employers and workers took a cautious approach to the question of EPF reforms with extra focus on investments in the stock market, saying employers and workers should have a bigger say in the management of these funds.

Some years, the EPF drew a lot of flak after it was revealed that it had invested in many loss-accruing companies in the stock market. More than 90 per cent of the investments are in secure government treasury bills and bonds but these are low return, hence the need to increase investments in other products with a higher return.

The results of the BT poll, which this time was not down on the street, is published on page 1 of the Business Times.

Commenting on the proposed private sector management, one respondent said that this would be detrimental on the long run.

“It's debatable if such a move can add any value (alpha) to the performance. If at all if there were real value addition as a result of a private fund manager, in the management of the EPF operations, the additional returns will be siphoned off as management fees and management expenses,” he said, adding that most pension funds have an asset allocation of 40 per cent equity and 60 per cent fixed income limiting the exposure to

File picture of workers at a garment factory. Unions are demanding a bigger say in how the EPF is managed.