Friday, August 3, 2012


*1st Case
*Is the EPF being looted?*

*Will you get back your EPF money?*

- *One of the largest funds in the world (C RM 440.52 billion *
- *Represents the life savings of 12 million Malaysians*
- *BN govt already spent 60% of the people's savings*

*23 June 2011, EPF said that 60% of its funds have been borrowed by the
Malaysian govt.

Dec 2010, the govt still owes EPF about RM 240 billion.

This means the BN govt has already spent 60% of all your savings.

DO YOU THINK you will get your money back?
See the chart (attached). 2012 will mark the 15th year of budget deficit
With no sign of financial smarts.

The Constitution of Malaysia caps govt debt at 55% of GDP. As of 30 June
2011, govt debt stands at 53%. When it touches 55%, the BN govt will
Officially be in crisis and the Constitution may need to be changed to
Increase borrowing and possibly require a bailout.

What happened to Greece recently? They had to write off 50% of outstanding
Govt loans. Just imagine if EPF is asked to take a 50% cut of outstanding
Debt owed by BN. More than half your EPF money will be lost, and you just
Have to accept it, after 40 years of working.

Greek Tragedy from Malaysian Travesty? See the attachment for more info. *

*2nd Case *

*No, minister, please
Posted on 7 February 2012 - 08:19pm* (The Sun Daily)*

*by Tony Pereira*

I WAS half-asleep as the front-page headline of *theSun* stared back at me.

In disbelief I read that funds from the Employees Provident Fund (EPF) —
RM1.5 billion to be exact — are to be channelled to a foundation to provide
Loans to Malaysians who are not able to get a housing loan from a
Commercial bank. Not only that. The loan would be at a lower interest rate
Than that offered by a bank. The report quoted Federal Territories and
Well-Being Minister Datuk Raja Nong Chik Raja Zainal Abidin as saying that
These loans would be provided to retirees and those without steady income.

Only a week earlier, I had dropped by an EPF office to get a statement. The
Friendly customer service representative who attended to me suggested that
I may want to withdraw some of my EPF savings and invest it myself. At
First I was confused. Why would she suggest I withdraw some of my savings?
Now, it all clicked.

Some 48 hours after I read the report of the scheme the government plans to
Introduce as soon as March 1, I am still in shock.
How can the government take funds which you and I have put aside for our
Retirement and use it to fund home purchases of those without a steady
Income? I am all for helping those who are experiencing difficult times,
But there has to be another way of doing so.

In case it has escaped the notice of Raja Nong Chik and other members of
The cabinet, the objective of the EPF is to set aside funds for employees
Who do not have any pension scheme. On retirement, the amount the employee
And employer have contributed during the employees' working life is
Available with interest or dividends to be paid in a lump sum so that the
Employee has sufficient funds to fund his or her retirement.
The monies belong to the members of the EPF — not the government. The board
Of the EPF has a stewardship responsibility — to act in the best interests
Of its members.

I do not think this scheme is in the best interests of its members.

Sadly, there is very little protection afforded to us — its members — under
Our laws.

According to the EPF Act, its board of directors has no choice in this
Matter. Section 11 of the Act gives the minister power to give directions
To the board. In other words, even though the funds do not belong to the
Government, the Act allows the government to decide how the funds which
Belong to the members of the EPF are invested.

Section 26 of the Act sets out the investment mandate of the fund. It
Specifically states the type of investments the EPF can make. There is one
Very broad statement which says that with the approval of the minister, the
Fund can invest in "any other form of investment".

This means that from a legal perspective, it is within the government's
Powers to implement the scheme which Raja Nong Chik has so gleefully

Well, as a member of the EPF, I have a few questions which I would like

If the fund is for those who are retired or do not have a steady income as
reported, how is the borrower going to repay the loan?

Secondly, since these loans are to be offered at a lower interest rate than
that offered by commercial banks, who is going to make up the difference in
these rates so that the members of the EPF do not lose out?

Thirdly, who is going to fund the agency that is going to implement this

Does the EPF have to pay a fee to this agency to take on this task? After
all, the amount of administration required to disburse RM1.5 billion will
be significant. Does the EPF have to pay a fee for this scheme to be

Finally, how is it that such a scheme can be implemented so quickly? The
scheme was announced at the end of January. Yet the minister claims that
the first loans will be disbursed by March 1. Can all the checks and
balances to ensure that the lender is protected be put in place within one
I understand that those of us who can afford it have a moral obligation to
assist those less fortunate. But let's come up with a scheme which does not
involve taking from a fund that has invested carefully for its members
because it is expedient to do so.

My research has indicated that there are no legal avenues available to us —
members of the EPF — to object to this poorly-thought-out and ill-conceived

If the government is really concerned about the welfare of those in the
low-income or no-income category, it should allocate a budget and be
transparent about the cost of doing this. Then there would be full
transparency to the public. At it is, by using the EPF, accountability is
absent and the cost of this initiative is lost in the myriad of investments
that the EPF makes for its members. Clearly there is no budget in the
government's annual operating plan for this initiative. Hence the use of
the EPF.

So what do we do?

I could go back to that friendly customer service representative who
attended to me at one of the EPF offices and follow her advice. At least
someone at the EPF does have its members' interests at heart.

*Tony Pereira is a chartered accountant and CFO of a private venture fund*
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