EPF not in any financial difficulties

Feb 25, 2017

The Employees Provident Fund (EPF) is not in any financial difficulties as maliciously claimed by the opposition, said Minister in the Prime Minister’s Department, Abdul Rahman Dahlan.

He said if EPF was in financial difficulties or made a loss, it would not be paying a dividend at all — more so a healthy 5.7% dividend for 2016.

Parti Amanah Negara’s former member of Parliament (MP), Dzulkefly Ahmad, PKR’s Kelana Jaya MP, Wong Chen, and DAP’s Seputeh MP, Teresa Kok, had allegedly claimed that EPF was facing financial difficulties thus declaring a lower dividend rate of 5.7% for 2016 compared to 6.4% the previous year.

The three senior politicians also claimed this was caused by EPF’s investment in 1Malaysia Development Bhd (1MDB), which they wrongly claimed was worth RM1.72 billion.

Abdul Rahman, who is also Director of Barisan Nasional Strategic Communications, said EPF’s exposure to 1MDB was only RM200 million, which was in the 30-year sukuk issued in 2009 and was fully guaranteed by the government and not RM1.72 billion as claimed.

To clarify further, he said, EPF also has exposure of RM1.5 billion in bonds for two independent power producers (IPPs) — Panglima Power Sdn Bhd and Jimah Energy Ventures Sdn Bhd.

“These bonds were subscribed by EPF in 2003 and 2005 respectively before 1MDB was founded and are backed by healthy cash-flow,” he said.

He said these two IPPs were previously acquired by 1MDB but had since been sold in a deal completed in March 2016, which was part of 1MDB’s rationalisation exercise.

Hence, these two bonds were no longer associated with 1MDB, he said.

“All three bonds are fixed-income bonds that pay fixed coupons and have never been in default. EPF has not lost a single sen in them,” he stressed.

Additionally, EPF’s remaining RM200 million exposure to 1MDB’s government guaranteed sukuk was just 0.027% of its total assets of RM731 billion, he said.

Therefore, for the three opposition leaders to claim that EPF was in financial difficulties or that 1MDB had caused losses to EPF was wrong and malicious, Abdul Rahman lashed out.

“As current or former MPs, the three opposition leaders had failed their sworn duties to be honest to the people when they made such ridiculous claims in their joint statement.

“They must not repeat this in future,” he warned.

He said given historical dividends since 2000, the current global and regional economic situation and the performance of other provident funds and mutual funds in the region, EPF’s 5.7% dividend for 2016 was commendable.

For the nine years from 2000 to 2008, EPF had recorded an average annual dividend rate of 4.99% whereas from 2009 to 2016, this average had increased to 6.1%, he said.

“I am confident that with the accelerating gross domestic product growth in the previous two quarters and the recent sharp increases in the Bursa Malaysia index, God Willing, EPF will perform even better for 2017,” he said. –Bernama