......as such, everybody should withdraw from EPF and invest in mutual funds......

Looks like my English is really bad. Look at the avatar and signature of the person I am replying to. I am being sarcastic there but it ended up I was promoting UT

High risk high return. Low risk low return. How can we compare EPF with UT. But there are UT agents trying to sell their products by comparing them. Utterly unprofessional

Share market is good in 2013. How can it be worse off than 2012 ? Furthermore, Kajang by election is coming. Unless they know they have no hope in the by election and dont care how the EPF members think

"No way" is too definitive a word. Especially in politics. All laws are in Selangor constitution. If the Selangor government really want to, they can amend the constitution. Have they got 2/3 majority ?

When times are good, everybody parties. When bad times come, the bold seize the opportunities

When the tide goes out, we can see who has the biggest balls

2015 was a good year in RM terms. Portfolio with foreign currency assets should give overall returns of 10% or more. If EPF can give 6% for 2014, then last year should be better

But they will keep some under their sleeve because 2016 had a bad start. In RM terms it could be -10%

Boss, there are many types of investment held by EPF. Yes, they are realised profits (interest, dividend, trading capital gain, rental etc). For losses, I guess you are interested to know EPF's investment in stock market whether they recognise unrealised losses ? Ie. if share price drop below their purchase price, do they recognise paper losses ? Short answer is "yes"

To have a better perspective, let's look at all the investment assets EPF is holding, then we can have a better idea overall :

1. Available-for-sale financial assets RM340b 45%
2. Held-to-maturity investment assets RM220b 30%
3. Loans, Advance and Financing RM100b 13%
4. Others (properties, Bank FDs etc) RM90b 12%

Total = RM750b

1. This is what you are interested to know -- the equity investment in stock market both domestic and overseas, quoted and unquoted. They are stated at fair value (market value if quoted) with the gain/loss eventually be recognised through either P&L or reserve

2. Mostly MGS, which has no impairment. For Private Debt Securities, the usual impairment is recognised

3. Mostly loans given to entity not quoted in active market through both EPF and its subsidiaries (including guaranteed loans and islamic loan). Impairment are recognised too

4. Mostly property investment and FD/Bank deposits. If there is an impairment in property investment (determine by property valuation report), then the losses is reflected. No impairment for FD/Bank deposits.

For forex, the gain/loss for the assets are taken into account at spot rate at year end. So, yes, they take in the forex gains and losses too (recognised forex gain in 2015 as expected)

Overall, yes they recognise losses/impairment when necessary and probable. In fact, they have very long and detailed accounting policy on the basis of recognising the loss/impairment. But there are some assets which losses/impairment are not applicable like MGS and local currency FD

Above is my quick read on the report. Anybody please feel free to add/correct the above extract

Just to clarify, what is OCI ? How is the accounting of changes in fair value of stock investment carried out ?

Does it work this way ?

1. Impairment (more permanent in nature) - charge to P&L
2. Loss in acquisition cost vs market price (temporary in nature) - charge to reserve, not affecting current year P&L

Thanks for the clarification

Boss prophet, as clarified by dasecret, the market movements of share prices which is temporarily showing capital gain/loss is not reflected in the P&L (hence, Not distributable to the members). But to present a fair picture of EPF's performance for the year, the gain/loss is adjusted in the reserve account.

I would think this is a very fair practice, as short term market movement is very common. EPF wouldn't want to face with a situation during year end when a sudden price surge/plunge happens and cause it's P&L affected by the short term movement. This will show a distorted picture on its performance of the whole year. Instead only impairment more permanent in nature is charged to P&L

Spell out the "E" in EPF and you will get the answer

Wong seafood teasing someone without experience in epf and prs....

Aiyoh...sifu want to be 100% sure

Not the first time our LYN FBI resident investment student make blunders.....

Son, can't remember when did I make a blunder. Must have been a long time.

If I make a blunder, I would have thank the person pointing out my blunder. He tought me something and I am grateful

Not like some impolite person asking back a question passing as an answer

I wonder those who doubt the country's administration have made arrangement to move out of the country ?

There are many brilliant people migrated. Because they don't trust the administration any more. They felt that the taxes they pay are being abused. They don't get equal treatment, and of course they don't trust EPF too where their retirement funds are kept...

We have been talking about "the ship is going to sink" for many years (remind me of unker dreamer ). But yet outsiders (world bank, credit rating agencies etc) think otherwise.

At least unker dreamer walk the talk. He said bye bye to malaysia...

I think you made the best move. I have been through that too.

Malaysia is bad, but not that bad lah. But for long term, it is better to diversify outside. No harm. If one day touch wood the ship really sink like unker said, at least got some thing to fall on to

But right now, the ship is still moving. So your strategy of keeping more outside and a portion inside is still the best and forward looking

I am playing devil's advocate

1. the dividend is quite good (so far), with a guaranteed rate of 2.5%

Good in the sense that it is guaranteed by the government (low risk). Bad if you compared to other government guaranteed funds like ASB. And if you willing to take higher risk, then there are better investment returns elsewhere (some 10+% depending on your investment acumen)

2.you're getting 6k tax relief

You can get the same 6k relief with insurance.

3. the returns are tax exempted

Returns from capital gain is also tax exempt. Dividends from stock is also 1 tier dividend which has no more tax in the hands of stock holder

4. you're getting free money from your employer (12%-16%, depending on where you work)

Look at it another way, it is the money which your employer can't pay you because they have to contribute their share to your EPF account. It is imputed in your net salary


Other negatives of EPF :

1. It is in RM, which in 2015 and 2016 has depreciated from 3.0 to 4.5 in USD terms. That is 50% depreciation which takes 8+ years of 6% dividend. In another words, 8 years of dividend gone to the drain in USD terms

2. It is money you can't use until 55 y/o. No flexibility

3. Money is lent to government and GLC. You heard the news of how they spend money ?

4. How safe is the guarantee from the government ?

5. If really EPF payout is only 2.5%, it is a bad investment. I think even 4% like FD, everybody will jump and complain. And it might happen very soon

So, don’t complain about imported food price since they are quoted in forex ?

Your logic is very laughable

Yes, different country will have different CAGR, based on the home currency. Why must it be all quoted in USD ?

All companies take into account of forex gain/loss in accordance to accounting standard. That's why those companies earn in forex their share price shoot up like mad during RM depreciation. Do you deduct the share price because of currency gain ?

EPF takes into account the forex gain/loss for their overseas investment

Funds sold in RM take into account of forex gain/loss when they report their CAGR

Our imported food experience inflation because we buy in RM

Those Zimbabwe people if they have foresight, they would have gain in forex because they can convert their USD back to buy a lot of stuff.

You may personally view it differently, but all others do take into account forex gain/loss in terms of base currency