Late to the party and saw this discussion going on. Did the survey and oppose the proposed tiering system. I got a feeling it going to be bulldozed into effect anyway and the survey is just a PR exercise. If it comes into effect, I hope there will be a way for people to slip under the tier with the higher dividend. And perhaps it is a good time to halt self-contribution at the moment.

For immediate effect, I think this will impact on the dividend for this year as some investments might be pulled out to fund this withdrawal. Even if it is only B40 members it still makes up a very big amount if 10k is allowed per member.

For medium term (before vaccine is administered to the mass population), I think EPF will holdback on investment and maybe make short term investments only in case CMCO again then another withdrawal allowed again as the floodgate has been opened, although unlikely.

I would think withdrawal would improve returns as epf has 36% in fixed income and 3% in money markets.  The capital return of bonds have already been realized with the interest rate decrease.  The withdrawal will come from the money market and bond portions.  So end up better returns for the people who are still in.

Hmm, I am not sure if EPFs investment team takes into account the Malaysian health setting - CMCO etc. Their target is returns, global markets are moving in their favour as well as their bond holdings must have increased in value due to interest rate climate. Their local (sizeable) allocation will likely continue to stagnate due to uncertainty.

I am more concern that a larger number of withdrawals will cause them to pare down long term bondholdings where they are sitting on nice yields.

I'm forecasting 4.25% to 4.75%.
Still optimistic number?

1. nothing wrong with people using their own money for survival/fun later but KWSP is set up for one reason and that is for retirement. While I am unable to comment on survival, fun should be funded by own savings/money outside of KWSP. If KWSP can be freely withdrawn for whatever purpose deemed suitable by the member himself/herself, KWSP will be doing the function of a bank or financial institution. Again, if it is about putting food on table and KWSP is the last avenue, yes, I have no qualms about withdrawing it otherwise people will be dead before they are able to reach the retirement stage.

2. Yes whether or not meaning it could be a yes and no. It has the potential to impact and also potential not to impact. But then why members who does not withdraw have to be exposed to this possibility?

3. Agree

4. While I agree it is an assumption, but it is a reasonable assumption. How many can manage their own money and in this sense I am comparing it against a very safe and decent return of 5-6% every year from KWSP? While you've done well if you've been consistently beating the EPF's return every year, still in my opinion people like you probably make up at most say 5% of the population? How many person do you think can achieve this?

Then for the last part, Yes I agree with you no absolute right or wrong, but it is the human nature that we tend to be more relax in our spending when we have extra cash (in this context is withdrawal from EPF) and tend to spend more lavishly. So I have to emphasise now this does not apply to everyone but it does happen.
While it sounded like punishing the poor for withdrawing for survival, another point of view is that it also encourage them to replenish their retirement funds when they are able to, and also prevent unnecessary withdrawals. And lastly, taking a general equity mutual fund / UT for example is incorrect. If it is a close ended fund meaning no withdrawal before the end of tenure (similar to EPF), the fund manager may hold less cash in less anticipation of withdrawal as compared to an open-ended fund where withdrawals are common on a daily basis.

I share your view, frustration and disappointment. Looking through the Stock Performance Guide some years back (Dynaquest has stopped publishing the hard copy), saw a few companies with EPF as the big holder. Wondered why while the companies were not doing well. Eg Shell Refinery etc. I am no share expert and yet I would not have bought them with a 10 km pole.

Feel that EPF has other added/hidden missions besides helping holders with their retirement funds. Eg political influence to paint a nicer economy front by buying into some of the major but poor performing companies. Yes, they might perform better later and that was their strategy?

Asked that before, some friends said that was because EPF has many fund managers (local and overseas) and they buy and sell independently. They cannot discuss and align their strategy to avoid share manipulation (forgot the right word here). Why not? Say I am a billionaire and I have 10 fund managers, surely I have a say to avoid fund manager A selling while fund manager B buying the SAME shares on the SAME day. A waste of money for the fees etc. etc. And not just once but saw a few occurrences in some companies.

Wake up, stand up and shake up the performance!!! But I guess that is only wishful thinking on my side.

So many comment on the tiered dividend, but as per calculation it is of negligible benefit for people who have less than 600 k and greater impact for someone who exceed this amount if the cut off is proposed at 600k.

If my salary remain stagnant and interest is around 5%. I would reached this cutoff in around 3 years.

I have so many strategy to bring it below or near 600k, one is by making epf-mis withdrawal or by taking out 2nd account and dump it into investment under the pretense of housing monthly instalment purposes.

Remember epf-mis is not an actual withdrawal, but at least it could bring your balance in EPF to below 600k or near that amount to minimize the impact.

Thanks.

Dont know whether to be happy or sad to see this list! So dominant in Msian shares. OK if it has no political hands in there.

Right now it is around 45% in Malaysia and 55% overseas for their equity portion unless they have changed it drastically in the past year or so but overall still around 70% of assets are Malaysian.

Their overseas portfolio has saved any underperformance from their local holdings but just imagine where the fund would be if their local holdings were top notch.

In the end of the day EPF, PNB and KWAP might not have a choice in investing in certain companies in Malaysia because if they don't buy them up then who will....

That is why like you said earlier one can hope people question that and force the media to hold their investments accountable instead of publishing articles about withdrawals that are misleading and hopefully proper economic reforms can take place which leads to these companies doing well.
For now it works but do remember of the Malaysian 10 Years Government Bond yield is around 2.7% so equities are going to need to do the heavy lifting for the future contributions if the dividends are to stay or improve from current levels.
You are right.

Below is based on the value of holdings that I got from a friend so apologies if there are mistakes:

i think there had been some almost similar postings just few pages back on what they think so be....

i am not sure of how others think...but as for me, i will just say to myself...
i am not in the position to have any control of how or what should be done....
thus i would rather just spend my time watching TV with my newly purchased TV box than thinking over matters that i have no control over....

to me, there are things which is more serious than this EPF ....for for examples...global warning and rising water level......i too does not think much of them ......i am just a "follower"

i have not reached the minimum sum requirement yet....

that need to beat the 5~6% rate too.....

currently i am using EPF as my FI portions of investment schemes

Based on my rough example of a likely reversed tiered dividend payout, the breakeven would be at RM1,166,500.

1. The dividend payout for each level at the above tiered rate:

1st RM50,000: 10.0%... RM5,000.
2nd RM50,000: 9.0%... RM4,500.
3rd RM50,000: 8.0%... RM4,000.
4th RM50,000: 7.5%... RM3,500

1st RM200,000... total dividend = RM17,000. (if at flat 5.5%, it would be RM11,000.)

next RM300,000: 5.5%... RM16,500
next RM250,000: 5.0%... RM12,500
next RM316,500: 4.0%... RM12,660

Total dividend = 17,000 + 16,500 + 12,500 + 12,660 = RM 58,660.00

If at flat 5.5%, RM1,166,550 x 5.5% = RM 58,657.50 (A difference of RM2.50.)
2. Please note this is my own example. It is just to illustrate how EPF members with low account balance would get a higher dividend payout.

It makes a great difference to the lower accounts. If the account balance is RM60,000, the annual dividend would be RM5,900 instead of RM3,300 (at flat 5.5%). A huge difference of +79%.

In the accounts with more than a million, say RM1,200,000; the annual dividend would be RM64,000, instead of RM66,000.
The difference is only -3%.

3. If not mistaken, the majority of the accounts in EPF at age 55 is about RM60k.

It is not based on any data... it is just an illustration of reverse tiered rates.

It can't be said to be a subsidy... if EPF is not able to get better investment opportunities to have higher returns in the last portion of their funds. The last several billions could be sitting there in their vaults in cash...