In that case EPF would be very humble... which means more "future" dividends are locked up to be paid out later.

https://vip.sinchew.com.my/diyitian-jack-epf/

Words of wisdom: 一个人有钱与否，不是取决他们的收入，而是思维

Sinchew reports: https://www.sinchew.com.my/news/20240627/nation/5718826

One month outflow is already 7 billion MYR, 12 months = 84 billion MYR

Ok, so next month outflow will be lesser then. My bad...

Cross-posted with ASNB FP funds thread: https://www.sinchew.com.my/news/20240702/yl/5728539

Sinchew's article on EPF Account 3. First series: Is EPF adequate for retirement savings with the flexible fund arrangement?

https://www.sinchew.com.my/news/20240812/finance/5829346

People like to login to their accounts and see all the numbers are nicely rounded up, and remain constant over days and months. Then once a year, on dividend date, the number goes up by some 5-6%, and then stays constant throughout the year again before going up by another 5-6% the next year. Rinse and repeat, so easy right?

That's not how the financial markets work unfortunately. Back in EPF office the managers and accountants are dealing with changing market values day and night. EPF hold bonds and stocks which are not constant in value and suddenly jump up by precisely 5,6,7 or 8 % on a single day in one year and then stay put throughout the day just to rise by precisely 5,6,7 or 8% 365/366 days later.

When EPF (and ASNB, for that matter) forces your account value at a constant value through the entire year, save for dividend date, they are bearing the market risk on behalf of you. That does not mean that the underlying risk of your money in EPF is 0. It just means that someone else is bearing the risk for you, not unlike an insurance... you are buying a market risk insurance from EPF/ASNB, and you need to pay a premium... That premium is the difference between what you would have gotten if you put your money directly in the stock/bond markets vs EPF/ASNB.

EPF won't collapse in theory because:

(i) Government can never default on its own debt; BNM just need to stand ready to buy all outstanding T-bills, T-notes and T-bonds issued in MYR by printing MYR out of nowhere and deposit them into your EPF account.
(ii) Not everyone dies at the same time or reach 55-60 years old at the same time. There is no imminent pressure to withdraw huge funds out from EPF, in one go.

EPF can gives you any return you want in reality. Parliament pass a bill for issuance of Special MGS (SMGS) guaranteed by the Malaysian government, and EPF buys all of them. SMGS yield will then be the return you want EPF to give you, determined via a private agreement between EPF and the government... Singapore did that with SSGS, CPF buys all of them and the proceeds go to GIC together with government budget surplus. The yield of SSGS is always below GIC's returns though, so that's still financially sustainable for them.

This post has been edited by TOS: Sep 21 2024, 02:14 PM

Next year's budget deficit expected to be around 77.5 billion MYR.

https://www.sinchew.com.my/news/20241003/finance/5967866

The cynical part of me thinks this is one attempt to plug/replenish the losses in assets from the Account 3 withdrawals, and help maintain a steady supply of money to fund the ongoing fiscal deficits...

Because that's not how investment works.

Companies can issue guidance or projections, which are earnings management. If it's done passively it's all good, especially if you know your future income stream pretty well (e.g., customer's pre-order, subscription-based business etc.)

But for investment fund that's a poor choice. No one can tell you how stocks will move up or down by XYZ percent the next quarter.

The same reason Berkshire Hathaway never issue any guidance for next quarter's earnings. Operating profit is easy to guesstimate, but the investment portfolio gains/losses are almost impossible to project.

We do know in the long run how things will perform, and you have the minimum 2.5% p.a. guaranteed return. But in the short-run, say, the next quarter, projecting return is a no brainer.

This post has been edited by TOS: Nov 12 2024, 11:22 AM