Stop playing politics with the EPF
Sebastian Loh, Malaysia Impact
What the hell is wrong with investing overseas lah? As an EPF member, that was my first thought when people were losing their heads over the fact that our pension fund was investing in US infrastructure. Pakatan bigwigs from Mahathir to Azmin Ali mocked or blasted our financial ‘aid’ to the world’s largest economy. Well, well. The EPF just creamed its critics.
The fund just announced the highest dividend rate in 21 years – 6.9% – no doubt only made possible by its substantial overseas investments. Yes, just like the ones announced by Najib when he met President Trump last year. And let’s not misconstrue or exaggerate what Najib told Trump at the time: “We want to help you in terms of strengthening the US economy.”
Social media went absolutely wild, accusing Najib of kowtowing to the US president. Well, what did you expect him to say then? “Hi, hello, we’re here to destroy the US economy”? Number one, a little diplomatic language doesn’t hurt in the world of, I don’t know, international diplomacy. Number two, and more importantly, the EPF – one of the biggest pension funds in the world – isn’t a bloody charity. It’s our money and we expect returns.
Believe it or not, the EPF is run by competent, far-sighted professionals. They keep their heads down, they do their job, and lo and behold, we get a 6.9% dividend rate. Do they get any thanks? Nope. Immediately, the declared rate is deemed an election-year ploy in favor of BN. Aduh. Since when did good news become an outlet for conspiracy theories?
Let me debunk this one for you. Take a look at the EPF’s dividend rates over the years. Do you notice any unusual spikes during election years? Nope. In fact, the rate in 2012 (6.15%; declared during the 2013 election year) was lower than the rates in 2013 (6.35%; declared in 2014) and 2014 (6.75%; declared in 2015). Cukup with the speculation all. Often, the most boring explanation is the likeliest: Wise investments are bearing fruit.
The EPF’s overseas investments are relatively meagre – just 28 percent of total investment assets as at 31 December 2017. Yet they brought in 41.45 percent of the fund’s gross investment income for that year. Shocking, isn’t it? Who knew that investing overseas in rich, developed countries could mean higher yields for EPF members like you and me? Not the Pakatan crowd for sure – basic finance seems beyond their comprehension.
And there’s something to be said about not putting all our eggs in one basket. Repeat after me: diversification is a good thing. The EPF has been trying to blunt risks to our savings by parking investments all over the world. If one market or one industry goes south, we can rely on the others. And it’s not like the EPF is abandoning Malaysia: the overwhelming majority of its investments are local. And yes, kawan-kawan sekalian, this includes major infrastructure projects like power plants, highways, and the MRT.
