2nd EPF!

The move to allow EPF members to buy only funds with a track record of at least three years has drawn mixed reactions.

Effective August, funds with a less than a three-year performance track record as well as newly launched ones will not be sold to EPF contributors. The new rulings also reinstated a previous move to allow EPF members to invest in funds with foreign exposure, but now with a limit of up to 30%.

The Federation of Investment Managers Malaysia (FIMM) recently said the reason to allow EPF members to invest in performing funds — those that have higher consistent returns for at least three years, was to strengthen trust and confidence in unit trust investment.

That was a fear that with the three-year track performance ruling, members might lose out as good investment “windows” did not last that long especially true for “thematic” investments. Thematic investing is an approach that seeks to identify and capitalise on economic, political, and social trends that are likely to have significant implications on important sectors of the economy and financial markets.

However the move is considered a good one as the three-year performance time frame would help investors choose funds that perform consistently and eliminate those that underperform. Just be warned that the selection criteria may lead members to focus too much on the past performance of a fund which may not necessarily be indicative of future performance.

There are other factors to consider in choosing the right investments, such as risks profiling, time horizon, qualitative factor and others

Diversified From EPF to Unit Trust

Significantly larger number of EPF members withdrew part of their retirement savings for investment in unit trusts.

The amount withdrawn under Members’ Investment Withdrawals in first quarter of 2010 (Q1 2010) increased by 43.26 per cent to RM911.15 million (Q4 2009: RM896.66 million) from RM636.01 million withdrawn in the corresponding period in 2009. Total applications approved under this withdrawal increased to 113,809 (Q4 2009: 114,375) from 87,420 in the same period last year.

The increase in withdrawals for investments is in tandem with the recovery in the domestic economy that began in the third quarter of 2009 and has since continued to gain momentum. The increase was also attributed to the rise in the number of members who are eligible for investment withdrawals.

EPF's Top 30 Equities

EPF will publish its Top 30 equity investments in companies listed on Bursa Malaysia on a quarterly basis. Members could see from the website which companies their savings were invested.

The investment highlights can be viewed at www.kwsp.gov.my. As of March 31, the EPF’s top three shareholdings were 67.33% stake in Malaysian Building Society Bhd, 56.14% of RHB Capital Bhd and 41.54% of Malaysian Resources Corp Bhd.

Ugly Ogling Ogre

Once upon a time, there lived an ugly ogling ogre who had a kind heart. He was a vegetarian. He was in love with Ohoho. Huh? Did I get your attention?

The power of storytelling is something that we fully understood and enjoyed as children, but somehow forgot as we grew older. Our brain waves would change during a presentation when the presenter says the magic words, "Let me tell you a story..." Those about to doze off would be jolted. Unconsciously, bodies lean forward, ears prick up and attention levels jump.

This year, I have the chance to reacquaint with this power as I was roped in to teach. I become a ‘Jataka Penglipur Lara’ to a bunch of 7 and 8 years old kids. Theoretically, it should be a stroll in the park especially since the stories are all compiled in the text book. Lo and behold! It is easier said than done as these millennium kids will have no patience to sit still for an hour to listen to this Generation X babbling away without any visual aid. Traditional way of bulldozing my way does not work anymore! Either I arouse them or I lose them!

I need to crack my head to utilize various props and tools. I need to combine the hardware and software! I can build up the expectation and suspense by parading these gadgets but the last thing I want is to disappoint them with boring contents and delivery.

I downloaded some Jataka tales from YouTube and shared them in the class, using laptop and LCD projector. The kids did not seem excited. Perhaps they were expecting more action packed scenes. I mixed these tales with other short animations. As expected, a few who had this notion ‘computer means games’, tried their luck, “ Teacher, can we play computer games?”. The answer was a no brainer!

The first time when I wheeled in the overhead projector, they were curious and wondered if I were showing them a Transformer! They were totally clueless with this piece of junk.

It was totally different reaction from seeing a computer. They must have been disappointed when the projector was switched on! Nothing transformed and nothing moved. Being smart kids, a few quickly found ways to amuse themselves by shadow playing with their hands!

Personally, the best tool to tell these stories was to get them to role play or act them out! This method would allow them to burn all their excess energy and voila, some hidden talents were unearthed. Initially, they would be coy and preferred to take the role of extras but after a few takes; many would love to be the hero and heroine! Perhaps they could do a better job than Keanu Reeves in portraying our great teacher.

The power of storytelling is too powerful to ignore. It is an effective and fun way to acquire knowledge.

We seldom remember key points stated as stark, bare facts. But we do remember stories and the powerful principles and messages that are subtly embedded inside them. This awesome power of storytelling is something that we can harness and arm these kids with.

Who knows, 20 years from now during the 100 year celebrations, a few will become prominent public speakers and will look back and say, ”..apa nama, I have my first break in BISDS..” The rest is history.

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.