Private Pension Funds

Malaysia is set to have private pension funds by the middle of 2010. This is part of the whole pension fund reform in the country and crucial for building the new high income-based economic model.

Several fund managers have shown keen interest in establishing private pension funds. Therefore, there could be a few, rather than just one.

At present, a relatively large proportion of the economically active population in the formal sector has pension coverage through the Employees Provident Fund (EPF), the public sector pension scheme and Lembaga Tabung Angkatan Tentera (LTAT).

As at the end of 2008, there were over two million self-employed Malaysians remaining outside any formal pension system.

The important issue is sustainability of financial security during retirement.

A survey by the EPF indicated that about 90 per cent of contributors have less than RM100,000 in their accounts. Over 70 per cent would have exhausted their total contributions within three years of withdrawing a lump sum on retirement at the age of 55. This means by 58, an average retiree would have depleted all his retirement savings with EPF.

This underlying trend reflects the sole dependence of retirees on their EPF savings as a safety net, and as such, the inadequacy of sustainable levels of income after retirement.

More Educated, More Greed?

A staggering RM20mil - that is how much Malaysians have been conned by African tricksters in the past few years in at least 11 internationally known scams ranging from Black Money to inheritances which promise non-existent wealth.

The statistics, provided by Bukit Aman, also showed that most victims are, ironically, educated people such as lawyers, accountants, academicians and even politicians who somehow were convinced that they could become instant millionaires by investing with these people despite all the publicity about such scams.

These con men, who preyed successfully on gullible Malaysians, are from Nigeria, Liberia, Cameroon, Burkina Faso, Senegal and Sierra Leone.

Conclusion - educated people are proven to bloody greedy!

How the Black Money scam works

The Black Money scam was reported by Interpol to have surfaced in Malaysia in 1998.
Most of these con artists enter the country on a social visit pass which allows them to stay up to 30 days. They tend to enrol in local colleges, just to obtain student visas so that they could extend their stay here.

They would then send out random emails and SMS, promising huge piles of money. Usually a “processing fee” is required in advance from their targets. In some cases, the victim lost big amounts of money without realising it until the fraudster goes missing. They are such smooth operators that a number of victims took loans from Ah Longs to pay them.

Victims are told about a stash of bank notes which had been dyed black to avoid Customs detection. The money was supposedly kept in a safe somewhere and the victim should purchase a type of chemical to wash off the dye which would then unveil “genuine” US dollars. The victim would be promised a share of the money.

The supposed origin of the riches varied with each new victim. The most popular version is that the money is the lost fortunes of former Nigerian dictator General Abacha which need to be transported out of Nigeria without the Customs knowing it.

Commercial Crime Investigation Department director said the con men, upon meeting their target, would produce a small vial of washing liquid called “Universal Automatic Washer” and ask the victim to select any black bank note at random.
The black banknote would be washed but with a sleight of hand, the con man would substitute it with a real note. Victims are given the “washed” bank notes and are encouraged to verify their authenticity at a money changer.

They would ask the victim to buy the chemical in order to process more money and that the costs of the chemicals are very high. These con artists modus operandi of “layering,” where a different person is sent to each meeting with the victim.
They are also known to use local women to carry out their deception, targeting single mothers or college students and using their bank accounts to conduct their shady business.

Most of these con artists are deported to their home countries as authorities usually lack evidence to charge them. However, a number of them would return to Malaysia under different passports.

As long as there are Malaysians who are fuelled by greed, there will be someone to take advantage of them!

10 Types of Scam

1) Animal vaccine:
These vaccines are ostensibly for farmers to use on their animals to help them breed faster. The demonstrations conducted by the con men are so convincing that the victims do not hesitate to buy the “magic vaccine” despite its high price.

2) Currency exchange:
Customers are offered extraordinary rates when they want to convert their money.

3) Inheritance:
Syndicates would use seemingly authentic documents to assure their victims that a great grandfather or close relative had died, leaving tons of money without an heir.
The victims are told that they would be charged a service fee and that they would then have a share of the riches. Once the money is paid out to the fraudster, he would disappear.

4) Parcel delivery:
Professionals such as lecturers and executives who surf the Internet frequently are often the victims. After befriending the victims through online chats, the conman would send them a parcel purportedly containing a “gift” such as a laptop, a watch or even jewelery.

Victims are told that the parcel had been held up by Customs, so they must pay a processing fee to retrieve the parcel. Once the fee is banked into a local bank account, there would still be no sign of the parcel.

5) Job offers:
Foreigners are dangled job positions in Malaysian hotels, multinational companies and telecommunication firms with promises of good salaries. All the dealings are done via Internet. They would be asked to pay for “visas” and “work permit fees”.

6) Lotteries:
Victims are told that through their email addresses, they have been selected as lottery winners where the prizes come in US dollars or pound sterling. To get the money, the victim has to be a member of a club and would be asked to pay very high membership fees.

7) Jewellery:
A syndicate would offer to sell gold in a form known as “granules”. The dealings often take place in hotel rooms where victims would be shown the genuine stuff initially but they would later discover that all they got is just a packet of metal powder.

8) “Bomoh”:
This usually involves celebrities and the wealthy who are eager to double their riches. The syndicate would use a piece of yellow cloth, a candle and the Quran, besides chantings. Victims are persuaded to leave a certain amount of money inside a bag. The are not allowed to open it until a specific time. Later, they would discover that all the money inside the bag had been quietly taken out and replaced with paper.

9) Credit card:
The suspects would use forged credit cards to settle their purchases at shopping malls, then reselling the items at a higher price later.

10) Drug-dealing:
Local women are made use of to smuggle drugs out of the country in exchange for jobs overseas.

Mistakes Mistakes

Here are some commonly made money mistakes that everyone should avoid:

Mistake #1:
Failing to Plan
Not many of us plan our finances. The most common response that we can anticipate would be the classic excuse “We are just too busy with work and family that we hardly have any time left to do the planning”. As a result, most of us end up paying higher taxes, leave our savings sitting silently in lousy investments for years or overpaying for financial products. Since there are always deadlines to be met at work, we tend to let our finances run its own course, thinking that it is of lower priority as there are no deadlines to meet nor is there anyone to force us to look into our financial plans, unless of course we run into serious deficit.
However, the important point to note here is that PLANNING is typically found to be a strong habit among people who have successfully accumulated wealth, even with just a modest income.

Mistake #2:
Spending Beyond Our Means
We constantly overspend due to peer pressure and consumer temptation that surround us on a daily basis. We are exposed to mild brainwashing with TV commercials, newspaper ads, sale circulars, and flashy shopping malls promoting the lifestyles adopted by the rich and famous, which of course involves having the latest mobile phone models, the latest luxurious cars, latest fashion trend. All these tempt us into spending exorbitantly and unnecessarily. The signals we get from not jumping on the bandwagon are that we will be considered left out of today’s scene. However, in order to do so, we end up spending way beyond our means. We will find that at the end of each month, the net salaries that go into our bank account are usually meagre, after servicing our car loans, housing loans, credit card bills and other utility bills.

Mistake #3:
Spending Future Money
Buy now and pay later! This has become a norm and the credit card has become a must-have item in our wallet. In fact, a lot of us carry more than one in our wallets. No doubt it is a convenient item to have around; however, some of us misuse it and treat it like a vehicle to spend our future money at will. It has become a common phenomenon where, by just settling the minimum payment at the end of the month, you will buy more now. As a result, the credit card bad debt snow-balls to an extent beyond our control. According to the bankruptcy report, the percentage of people declared bankrupt due to default in credit card payment has increased in the last few years especially among the younger age group. Be wise when using credit card. Making minimum monthly payment on credit card debt allows you to buy more now, but it will cost you dearly in the future.

Mistake #4:
Delaying Saving for Retirement
Most of us aim to take up early retirement. In order to achieve this, we need to plan our finances to make sure that we have enough savings to sustain the life style that we desire even after retirement. However, many of us find that even when we approach retirement, we still struggle to meet the savings target that we have set for ourselves earlier. As our income grows, our savings are supposed to increase as well, instead, we more often than not, have big items to spend on, i.e. house upgrading, new car purchase, club membership to keep up with our peers, etc., that prevents us from depositing more into our savings.

Mistake # 5:
Investing in the Wrong Products
There are various kinds of financial products in the market. However, in order for us to identify the right product that suits our risk and return profile, we need to equip ourselves with some basic investment knowledge and do the homework ourselves. Instead, most of us end up investing in some products, simply because we rely too much on the financial advisers, who might have the agenda of pushing higher sales for their products and therefore providing misleading information to us. It is always important to study the product characteristics or the management team track record before investing.

Mistake #6:
Not Saving for a Rainy Day
Some of us think that purchasing insurance is a waste of money. However, we are vulnerable if we and our family do not have insurance to cater for any loss of income. In the event of some unfortunate incident, especially those affecting the family’s bread winner, without any cash reserve or insurance, it will be devastating to the whole family. By then, it would be too late to start thinking of income replacement.

Mistake #7:
Focusing Too Much on Money Matters
All the above tell us to focus on our finances. However, on the other extreme, we must also not be too engrossed in accumulating our wealth to the extent that we lose sight of other priorities in our lives. While we plan our financial health, we must not neglect our own health, family and friends, career satisfaction and fulfilling interests. Without these, even with tons of money, we will not be happy.
Lastly, we need to remind ourselves of the importance of planning our finances. If we are not fully, totally and truly committed to creating wealth, chances are wealth will remain estranged to us.

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