Lesser Amount can be Withdrawn for EPF Members Investment Scheme effective January 2014

Are you an EPF member who withdraw money out for investment scheme? Then, this is a very important news to you.

Effective January 2014, the minimum basic savings required in Account 1 was revised upward. This will affect all of YOU who withdrawn certain amount from EPF account 1 for eligible investment purpose. Higher limit means lesser money you can withdraw from EPF in the future.

How much will be increased?

Based on the chart below, the percentage increased can be as high as 64%. Generally, the increasing amount was at least 50% once you're age 27 onward.

How to calculate how much can I withdrawn from EPF account 1?

What's the different or impact?

Depending on your age and how much savings in account 1, the impact varies by members. For better explanation, please see example below:

Finance Malaysia hopes this post can enlighten you on EPF members investment scheme withdrawal. You may share this to your friends. Thanks.

EPF Rules on Nomination (MUST Read)

There is a chain email spreading about some EPF rules, that makes members worry such as below:

If ONE of your nominees in the EPF nominees list dies, automatically the whole arrangement (EPF Nominees list) is VOID. Meaning if, you only put in ONE name & unfortunately he/she dies before you? Automatically EPF will channel your EPF money to trustee of AMANAH RAYA upon your death.

Upon surrender to trustee of AMANAH RAYA, your children will have to battle the money through 3 channels;

• Majlis Agama
• Pejabat Tanah
• Mahkamah

Is it TRUE ???

According to EPF, if a member has more than one nominee, and one of the nominees dies during the member’s lifetime, ONLY the portion that was bequeathed to the deceased nominee will be invalid.

Should the member later dies without updating his nomination, the other nominees will receive their portion accordingly. Only the portion that was bequeathed to the deceased nominee will be subject to procedures under ‘EPF savings without nomination’ in which the first priority for the right to claim the member's savings goes to the nearest next of kin or the appointed administrator of the deceased member’s estate.

Therefore it is NOT TRUE that if you, as a member, have named more than one nominee, the entire nomination will be void if one of the nominee dies before you. It follows however that if you have named only one nominee and he or she dies before you, the nomination will be void unless a new beneficiary is nominated.

What to do if one of the nominees dies, and I want to change it?

Please note that you DON'T have to produce the death certificate of a deceased nominee to change your nomination. You can change/update your nomination anytime by simply completing a new KWSP 4 (AHL) Form. This will automatically revoke any earlier nomination made.

What if BOTH member and nominee dies together / NO nomination ?

Depending on the amount of savings in the member’s account, if there is NO nomination the procedure will be as follows:

If member’s EPF savings < RM25,000:

• Initial sum of RM2,500 will be paid to the next of kin.
• The balance will be paid after a two-month period from the date of the member’s death.

If member’s EPF savings > RM25,000:

• Initially a sum of RM2,500 will be paid to the next of kin.
• The second payment (not more than RM17,500) will be paid to the next of kin after two months from the date of the member’s death.
• The balance of the savings will be paid upon submitting the Letter of Administration/Letter of Probate/Distribution Order/Faraid Certificate from the party that administers estates such as Amanah Raya Berhad or the Court or the Land Office, respectively. The process to obtain these documents is time consuming and certain fees will also need to be paid. On the other hand, with nomination, no fees need to be paid.

As such, this is precisely why nominating is very important. You should also ensure that you update your beneficiary whenever there are any major life changes such as marriage, additional new members or the death of a nominated beneficiary.

Source: EPF

Is it SAFE to Invest in Private Retirement Scheme (PRS) ?

This is one of the common question asked by potential PRS contributors. First, I want to emphasis that PRS is a long-term investment for the purpose of retirement planning. In investment case, long-term means you already using the most powerful method to reap a good return. Anyway, many contributors still want to treat PRS as some kind of short-term investment. I got the answer for you.

Basically, PRS is very similar to unit trust investment. The underlying structure and investment philosophy were the same actually. No wonder many people perceived PRS is another unit trust scheme. Yes, you're correct to a certain extent.

Under the guidelines, each PRS providers must at least launched their core funds for investors to select, namely Growth, Moderate and Conservative. To make things simple, we only discussed these core funds because I believe most of us only invest in core funds. From these core funds, growth fund is the most aggressive one. In other words, the most risky one, with the aim of getting better return than the other two.

Asset Allocation of Core Funds under the guideline by Securities Commission of Malaysia

Is it really so risky?

Let's us examine even deeper now. Again, under the guideline for PRS growth fund, only maximum of 70% of NAV can be allocated to equities, while the balance was in fixed income/money market instruments. If you're an unit trust investor, you will know that this is almost like a balance fund type of asset allocation. For your information, for normal unit trust equity fund, equities exposure was between 70% - 98%. Meaning, the maximum equities exposure for PRS Growth fund equals to the minimum of an equity fund. Not so risky, right?

Of course, if you want higher equity exposure for your PRS portfolio, you can opt for those non-core funds, which can go as high as 98% in equity exposure. Then, the next question was "Is it risky to invest now?"...

It all depends on your perception. If you think that Malaysia market is too expensive now, you may opt for those funds with foreign exposure. Currently, from the 4 PRS providers whom already launched their schemes, some can invest into foreign countries. Some are fund-of-funds, some are foreign funds. Coming soon, more variety of PRS funds will be offered, such as property fund, commodities fund...

This is a guest post by Alex Yeoh in the series of Private Retirement Scheme. For more PRS info, you may contact Alex Yeoh (email: alexyeoh@vka.com.my), a licensed financial planner, whom representing multiple PRS providers. Thank you.

EPF Flexible Age 55 Withdrawal

As all of us know, Employees Provident Funds (EPF) is meant for our retirement savings which helps us go through our golden years. However, statistic shows that most of the contributors opted for full withdrawals at age 55 and finished it all within a period of 10 years.

In addressing this issue and encouraging contributors to keep their savings longer, EPF has launched a campaign to promote awareness on their "Flexible Age 55 Withdrawal Scheme". How flexible is it? If you're one of the to-be-retiree, then this post more than relevant to you. Read on and share this with other contributors if you think that this might be useful for them.

How does "EPF Flexible Age 55 Withdrawal Scheme" works?

By opting the scheme, contributors could withdraw part of their savings at any one time or make monthly withdrawals or a combination of both options. This is how flexible it is where you can vary the frequency and withdrawal amount anytime. In other words, withdraw only when you need it, otherwise, just left it with EPF to continue accumulate with compounding dividends for a longer period.

To elaborate further, the eligible combination withdrawal method are as follows:

1. Withdrawal of a partial amount of your savings & retain the balance in your EPF account
2. Withdrawal of a partial amount of your savings & transfer the balance for monthly payments
3. Withdrawal of a partial amount of your savings & transfer a partial amount for monthly payments while maintaining the balance in your EPF account;
4. Transfer your entire savings amount for monthly payments.

Members can submit the application within 6 months before age 55, according to the date of birth. However, payment will be made within 5 working days after reaching the age of 55.

Withdrawal Amount Eligibility

Minimum withdrawal amount for partial withdrawal is Rm2,000. Meanwhile, let's have a look at Monthly Payment Withdrawal as below:

• You may choose monthly payments with the minimum amount of RM250.00 per month for a minimum period of 12 months.
• The minimum amount that can be transferred as monthly payments is RM3,000.00.
• You need to determine the total monthly payment amount, the amount per month, the number of months and the payment commencement month.
• The EPF will transfer the total withdrawn amount into a special account. Crediting will be made into your bank account every month according to the amount and number of months applied.
• Payments will be made on the 25th of every month.
• The number of months for the monthly payments do not go beyond your age of 75 years.
• You may cancel this withdrawal any time.

Is it very troublesome?

In order to opt for the said withdrawals, you would need to prepare the following documents only:

• MyKad
• For payment via direct crediting to member’s bank account:
• Bank passbook or Saving/Current account statement
• Owns an account with the panel bank appointed by EPF
• The bank account must still be active
• Your identification number matches with the bank’s record
• Payment is made in Ringgit Malaysia
• Otherwise, payment will be made via banker’s cheque

Should you have any enquiry or require additional information regarding this withdrawal, kindly contact:

• Any EPF Office nearest to you;
• The EPF Call Management Centre (CMC) at: 03-8922 6000
• Customer Feedback: http://enquiry.kwsp.gov.my

Source: EPF website

How to calculate EPF investment withdrawal amount?

Although EPF members investment scheme was launched years ago, yet many Malaysians still do not know the existence of it. Follow by next question: "How to calculate the withdrawal amount?". Hope this post can give all of you an insight on this matter.

First, we must know that EPF members investment scheme only allows eligible members to withdraw eligible amount to EPF-approved investment schemes. The schemes was being monitor closely by EPF authorities, by reviewing it every year, in order to protect the interest of EPF members.

Am I eligible?

Members can withdraw up to 20% of access amount from the minimum required Basic Saving in Account ONE. The minimum amount for each withdrawal is RM1,000. Sounds confusing, right? Let's explore it step-by-step.

Step 1:

Determine the age (what is your celebrated last birthday?)

Step 2:

Determine the required Basic Saving in Account 1.

Step 3:

Determine your Current Saving in Account 1.

Step 4:

Applying the formula : (Account 1 - Basic Saving) x 20%

Example of Calculation

Still find it difficult to understand?

Easy. Just register for an EPF i-Akaun (an online EPF account), click on the "Withdrawal" button, then you can view the eligible withdrawal amount for various purposes. It's just that simple and accurate, without calculator. What's more? You can view the withdrawal status and history too.

Related Post: EPF i-Akaun (Series 1)

Related Post: 2012/2013 List of Unit Trust funds for EPF Members Investment Scheme

Source: EPF website

2012/2013 List of Unit Trust Funds for EPF Members Investment Scheme

Last week, EPF announced that it has published the revised list of Fund Management Institutions (FMI) and unit trust funds for 2012/2013 for EPF Members Investment Scheme (EPF-MIS). For the period of 2012/2013, a total of 223 active unit trust funds from 24 FMIs are offered under EPF-MIS, details of which are as follows:

"The list of funds under EPF-MIS is reviewed annually based on a set of evaluation criteria that focuses on the consistency of fund performance, as approved by the Ministry of Finance. The evaluation process is carried out together with the Federation of Investment Managers Malaysia (FIMM) which represents the unit trust industry," said EPF General Manager for Public Relations.

When would it be effective?

The revised list will be effective for the period of 1 June 2012 until 31 May 2013. 

List of EPF approved funds from some of the popular Fund Management Institutions:

How about Public Mutual?
Because of too many funds, please click here for the list of funds from Public Mutual.

Source: www.kwsp.gov.my

Is it Viable for EPF to support Subprime Loan? (Feb2012)

In 2008, we have seen the catastrophic effect from the subprime mortgage loan in US. Even now, US is still struggling to fully recover from their worst financial crisis since Great Depression. The problems doesn't build in one day, in fact, it took years to snowball the problem. And, yet Malaysia seems like wanting to catch up with them by supporting the subprime loan. But, the unique part of our version is "using EPF monies"?

When news first broke out last month that EPF would be channelling RM1.5bil for a special public housing scheme, alarm bells sounded off for many contributors. Maybe EPF already knew the result for last year performance, it announced later that contributors are getting a decade-high dividend rate of 6%. Salute to EPF. Since EPF are doing so good even without the said "loan", then, why EPF have to take the risk to loan out to this scheme?

Afterthat, EPF published a statement claiming that the money is loaned to the Government, not to individuals. All the proceeds will go through a special purpose vehicle of Federal Territories Foundation (SPV FT Foundation) where terms and conditions are set.

YOU must be kidding, very obvious the end borrower was individuals, not Government. Where does the risk comes from? Ultimately, the individual borrowers are the one who determine the survival of the scheme.

What EPF gets?

For us, the most important detail that's available is 5.5% profit. The rest, it's very surface only without much details, such as the process of borrowers selections, criteria for loan application, and a lot of what if... Transparency is not there either.

No worry, Government can GUARANTEE the scheme mah!!! Yet, another question comes in. How does Government guaratee it? If something goes wrong to EPF monies, Government will use its money to compensate EPF?

Wait... Doesn't Government money belong to us too?

Budget 2012: How Does 1% more EPF Affecting YOU?

During the recent Budget 2012 announcement, one of the controversial issue is the increment of 1% contributed by employers to EPF effective 1st January 2012. This will bring the minimum contribution rate by employers to 13% from 12% currently for those earning less than RM5,000 per month.

The Fatter EPF

While employees are welcoming the new rules, many employers are voicing out their concern on the extra burden being bear by them. "This is not fair to us, especially during current scenario where businesses are bracing for more challenging times ahead", says one of the concerned boss. Although there is some sort of tax-relief for employers who contribute more, bosses are still unsatisfied by the new ruling which adds to their fixed costs.

What is the rationale behind?

The reason is somewhat very good, that is "to equip Malaysians more retirement funds for their golden age" after recent facts shown that Malaysian generally fully utilized their EPF monies between 3-10 years time after retired. This is an alarming issue which prompt government to impose the new ruling.

We work hand-in-hand

However, Finance Malaysia found another good reason behind all this. That is "EPF needs more money". Why?

1. General election is coming very soon
2. We need a feel good factor on Bursa Malaysia
3. External environment resulting in a not so perform KLCI

If we link all the three points together, we can come out a conclusion, which is "Due to the gloomy economic outlook caused by western countries, Bursa Malaysia is in red territories in-line with other countries. Normally, KLCI is also an index which measures the health of Malaysia's economy. In other words, people perceived that our economy is good if KLCI is advancing, which acts as an advantage for the government in the coming general election. And, one of the important supporters was EPF". So, you know why EPF needs more money now?

Then, how does 1% more EPF affecting you?

Less Increment. If raw materials prices eats into profit, bosses will pass the extra costs to end consumers. Does this 1% more EPF consider as extra cost to bosses? Definitely. But, this is called operating costs to employers. So, the natural option for employers is to giving you less increment, thus reducing the effect of 1% more EPF contributions.

Example, you may only get a 9% increment, instead of your deserved 10%. Anyway, you still get the money in this case, but is in your EPF account rather than cash in hand. Good luck, buddies.

Note: This is purely for your own consumption without the intention to provoke any parties.

Why Maybank and CIMB gave up on RHBCap? (23 June 2011)

Merely less than one month of battle (not even pulling off the gun), both Maybank and CIMB today respectively announcing to abort the merger talks with RHBCap. Funny oh? First, the news of aborting was first reported by a Singapore newspaper, not Malaysia, and why not Malaysia? Second, both contenders had set end of June's proposals, announced just only last week. So fast change mind?

Both CIMB and Maybank are turning their heads away from RHB now.

Of course, between the dates, Abu Dhabi Commercial Bank (ADCB) made a significant headline when it sells its 25% stake in RHBCap to its sister company, Aabar Investment, for RM10.80 per share, which value RHBCap at 2.25 times RHBCap book value. Does this really affecting the merger talks?

What CIMB says?

In a statement Thursday, June 23, CIMB group chief executive Datuk Seri Nazir Razak said that based on its discussions and assessment of the present expectations of key stakeholders, the bank did not believe that it would be able to arrive at a value creating merger.

“Merger negotiations are both resource consuming and distracting for staff and stakeholders.

"Therefore, we prefer not to prolong our discussions unnecessarily, allowing all parties to return to ‘business as usual’ as soon as possible,” he said. (TheEdge)

What Maybank says?

“In light of recent developments and following further deliberations, the board of directors of Maybank has decided not to pursue the possible merger at this juncture,” Maybank said on Thursday, June 23. (TheEdge)

Who knows? RHB's investors should sell their holdings above RM10 previously.

What Finance Malaysia says?

"The merger talks most probably is still on-going, but behind the board room. ADCB's RM10.80 did set a hindrance for both parties to proceed with the merger talks, in order to convince other shareholders."

"Other than that, EPF's role is crucial for all parties to consider now. Sooner or later, EPF must divest its stake to below 20%. By then only can EPF remove itself from the day-to-day operations of RHB Bank. Remember, EPF's role was supposed to invest, not managing a company."

"Thirdly, Maybank and CIMB may think that the merger talks would takes a long time to consider, and it may affects the day-to-day operations of RHB Bank. Just like EONCap, many of their staffs are turning to other banks while Hong Leong Bank is launching and fighting its merger plans."

EPF declares 5.8% dividend rate for 2010

For the financial year ended 31 December 2010, Employees Provident Fund (EPF) announced a 5.8% dividend rate. This translates into RM21.61 billion, which is the highest dividend payout amount ever to members, an increase of 11.55% over the 2009 dividend payout of RM19.37 billion.

For the year 2009, the dividend rate is 5.65%. "The remarkable investment income achieved in 2010 was especially driven by the performance of equity investments. The improved financial and economic conditions provided the market with sufficient liquidity, allowing profit taking activities throughout the year", said EPF chairman in statement issued.

Who is the main contributor?

Buoyed by a good year for the equities market, equities were the largest contributor to the EPF's gross investment income in 2010, representing 45.45% of EPF's total gross investment income. (See Table 1)

Source: EPF website

During the year under review, EPF total investment assets also continued to register healthy growth by crossing the RM400 billion mark to stand at RM440.52 billion as at 31 December 2010.

EPF's investment strategies are broadly guided by its Strategic Asset Allocation model which was designed to fit EPF's risk and return profile and to maintain consistent returns in the long run. The year 2010 saw about 2/3 of EPF's total investment assets remaining in low risks fixed income instruments with stable streams of income.

Accordingly, members may check their EPF Account Statement for the crediting of the 2010 dividend, either via EPF kiosks, counters or i-Akaun, from 21 February 2011 onwards.

Source: EPF website

Related Posts:

Revised EPF approved funds effective 1 September 2010

EPF: i-Akaun

Revised EPF approved funds effective 1 Sept 2010

Effective 1 September 2010, there are 223 unit trust funds approved under the EPF Members Investment Scheme (EPF-MIS). The list of EPF approved funds is updated upon conducting the fund evaluation exercise based on EPF-MIS fund evaluation methodology (FEM).

Under the FEM, funds must meet the set standard criteria, including:-

1. At least 3-years track records
2. Have investment mandate of not exceeding 30% in overseas assets
3. Consistency in return performance among peers/ with benchmark

How frequent will it be reviewed?

By using an international research house rating data as input in the assessment and evaluation of funds, the exercise will be conducted once a year. 

Suspended Funds?

Funds that underperformed their peers will be suspended, until they are qualified to be reinstated. Suspended funds are not allowed to received new investment under the EPF-MIS, yet investments made by investors prior to the suspension are nevertheless allowed to remain in the funds.

Suspended Funds are loss-making funds?

Not necessary. FEM is just a measure of relative performance, as suspended funds may still generate strong profits, but not as high as their peers.

Please click "EPF approved funds" for the list of 223 funds.

Related links:-

Tax Benefits of Unit Trust YOU must know

Post-Budget 2011 Interview with Finance Malaysia

* Please take note that this blog is for reading pleasure only, and NOT intended to offend any party.

Below are some questions posted to Finance Malaysia (FM), with some interesting reply:

Q    : Let's start off with the famous KL MRT project. Any comment?

FM : Well, this is definitely a good public transport reformations for KL citizen. However, please bare in mind that the extensions of two existing LRT lines still not yet started. Implementation is problem, not project.

Q    : How about the development of the Malaysian Rubber Board land in Sg. Buloh by EPF?
FM : The project costs RM10bil for 15 years. I don't know when EPF (Malaysians' retirement fund) role has changed to being a developer?

Q    : Malaysia's tallest building - 100-storey Warisan Merdeka. Is it necessary?
FM : So that Osama can either choose this or Twin-towers. Haha. Since EPF can be a developer, why not PNB? Malaysia Boleh spirit for all...

Q    : Existing income tax relief of up to RM6,000 extended to Private Pension Fund contributions. Good?

FM : Sounds good, but not viable. Because, first, those who afford private pension fund most likely already exceed the limit. Second, if we bought a simple life insurance, the premium plus with EPF contributions, already exceed the limit. Instead, government should separate life insurance premium with those contributions.

Q    : Wow... RM 3bil Karambunai eco-nature resort in Sabah.
FM : Yes. We have another "first" of the world, but, with RM 3bil we can buy the whole Sabah already.

Q    : Service tax increased from 5% to 6%. How would it affect us?
FM : Watch online TV, instead of Astro. 20% (5% to 6%) increase yet considered minimal as stated?

Q    : To develop football, a Football Academy will be build in Pahang. Why Pahang?
FM : First, can we revive our football team? Second, maybe Pahang is the home of prime minister (not football).

Q    : NO toll rate hike from PLUS expressway for next 5 years?
FM : I believe this is the only thing which directly benefiting me. Would it be better if this is permanent?

Why MMC want to take over UEM Group?

When the RM15.6 billions take-over news broke out, MMC share price has been rallying to multi-months high. It was reported that MMC is pairing with EPF and PNB with MMC holding a 40% stake of the consortium. On the other hand, Khazanah Nasional Bhd is the ultimate holding company of UEM Group Bhd.

The Pull factors…

1. PLUS Expressways, is one of the key assets that spark MMC interests? The national’s largest cash-generating toll-operator undeniably is Khazanah’s golden asset with 55.2% direct and indirect interest.
2. UEM Land, which has a huge land bank in southern corridor – Iskandar Development Region. This is favorable to Johor based MMC’s investments.
3. To boost its construction arm with stronger muscle? UEM Group is having several projects in Malaysia, such as the Penang Second Bridge. MMC can leverage on the latter expertise and also to gain market share, given the lack of domestic awards.

What makes me interesting is the alternative MRT proposed by IJM-UEM recently. By acquiring UEM, MMC could break-up the joint venture and effectively eliminate the said rival proposal which reportedly costing much lower than the Gamuda-MMC RM35bil proposal. There are two possibilities:

1. Take-over succeeds.
2. Failed. But, MMC guaranteed succeeds in MRT project, because government is running out of time to consider an alternative proposed by IJM-UEM joint venture, which is remain uncertain.

Either way, MMC will gain more than harm. Or, is this the strategy employed by MMC?

EPF i-Akaun

Since EPF go online years ago, many people are disappointed by the way the website was maintained and updated. However, as time goes by, EPF had done a face-lift to its website. If you noticed, I could say that EPF website nowadays is very informative, convenient, well-organized. 

I know, I know, maybe you are saying: “Is it really so goooood ???”
The fact is, I am not a EPF staff, then why I need to praise them?

From now onwards, there will be an EPF series written in this blog.
In this 1st series, I would like to touch on i-Akaun by EPF.

What is i-Akaun?

i-Akaun is a member’s or an employer’s personal account to be used on the Internet, specifically on myEPF portal. By having this account, users are able to access EPF services that are being offered online.

What are the online services offered?
For members:
- View and print account statement for current and previous year.
- View withdrawal status and history.
- View EPF transaction activities.
- Update mailing address and personal details.
- View eligible withdrawal amount for various approved purposes.

For employers:

- Checking and printing the current and previous account statements.
- Checking the EPF transaction activities.
- Access to Form A: Credited contribution archive.
- Checking employee’s EPF number.
- Checking contribution with incomplete information.
- Dividend share calculator for Government employers.
- Registration of new employees.

Wow… How to set up my EPF i-Akaun ?

For members:

1. Visit the Smart Kiosk or Counter to generate your own Activation Code.
2. Then, surf the EPF website to activate your i-Akaun before the expiry date.

For employers:

1. Register i-Akaun for Employer at the EPF website.
2. EPF will e-mail or mail you the details of your Activation Code for confirmation purposes.
3. Visit any EPF offices together with a copy of the e-mail/letter to collect the Activation Code. Please bring the required documents stated.
4. Activate your i-Akaun before the expiry date.

Since you may faced difficulties to locate EPF offices, I suggest you to get it done easily at any of the EPF kiosks which can be found in certain branches of the following bank:

- AmBank
- RHB Bank
- RHB Easy
- RHB Islamic
- CIMB Bank
- Public Bank
- HSBC Bank
- CitiBank
- National Heart Institute
- Permodalan Nasional Bhd

 It’s FREE + Hassle Free. What are you waiting for?

Source: EPF website (http://www.kwsp.gov.my/)