Comments On October Budget

As a Malaysian business and finance site, I guess I am expected to post some comments on the Budget. You may or may not like Najib, but as a Finance Minister, I think he has the best grasp of economic and finance issues compared to the Finance Ministers we have had for the past 20 years. Normally we see funds being thrown about and that's that. He has obviously been well advised, most of the measures are well defined with timelines and deadlines.

The strategy is to focus more on what we do well, what we have inherent strengths. The overall bigger picture is to ensure higher incomes for all - i.e. moving up the value add curve. The budget was very responsible, Najib could have taken the easy route and spend and spend with abandon. There are still a lot issues naturally if we wish to move up the value curve - the most pressing has to be the subsidy mentality. We need a complete overhaul of how we view the subsidy, we need to set timelines to gradually eradicate it except for the most basic and necessary products - at the same time, these removal / reduction of subsidies need to be balance in that the most affected will not suffer too much.

The overall budget will be taken positively by most foreign research houses, it provided strong soundbites, says the right things. I would say that the stock market should surprise most with a good performance.


* Government to reduce maximum individual income tax rate from 27% to 26% for chargeable income group exceeding RM100,00. Personal relief increase from RM8,000 to RM9,000 in 2010. This means that each individual taxpayer will enjoy an increase of RM1,000 in disposable income.* Govt to allocate RM899m for tourism industry in 2010, attract more participants from UK, Japan, Korea under Malaysia, My Second Home. (The man on the street always on the lookout for more take home pay. While that is a narrow perspective, more cash is always good, and judging from our high-ish tax rates compared to the rest in the region, this is a good move.)

* Govt to speed up implementation of high speed broadband at total cost of RM11.3b,of which RM2.4 billion is from government and RM8.9 billion from Telekom Malaysia. (Very important. It smacks at our overall competitiveness. Crucially there is a dateline to rollout in KL by March next year, and the rest of the country a gradual rollout by 2012.)

* Govt proposes individual taxpayers be given tax relief on broadband subscription fee up to RM500 a year from 2010 to 2012. (Good move.)

* Govt to allocate RM9b for infrastructure, of which RM4.7b for road, bridge, water, sewerage projects and RM900m for rail. (Good addition to the "earlier stimulus package", did not go overboard.)

* Govt to look into micro insurance, takaful coverage. Premiums from as low as RM20 per month for small traders, coverage from RM10k to RM20k.

* Flexible brokerage sharing between stockbrokers, remisers. Flexible brokerage at 40% for remisers. To be fully liberalised in second stage by Jan 1, 2011. (Will allow more aggressive brokers to snatch remisiers. Expect Singapore houses to be more aggressive here.)

* Allow 100pct foreign equity stake in corporate finance, financial, planning companies from at least 30pct local stake now. (Good move although many have been doing these deals out of the country anyway.)

* For upstream petroleum companies, income tax for yr assessment 2010 based on 2009 income can be paid over 5 years. (Allows for better reinvestment and cost/revenue matching.)

* Govt to impose 5pct tax imposed on gains from disposal of real property from Jan 1, 2010. However, it will be retained for gifts between parent and child, husband and wife, grandparent and grandchild. This tax exemption will also be given on disposal of residential property once in a lifetime. (Property companies will not be pleased with the reintroduction of RPGT, but its a pre-emptive move, considering the "better leverage to borrow from Account 2 of EPF" for purchases. 5% is fair and will keep a lid on things, a hint on things that Bank Negara may be keeping rates low for a few more months. Low rates, which is necessary to keep ample liquidity in the system, is targeted to boost lending to business and create/save jobs. An indirect nasty would be channeling it to push property prices higher - the RPGT is to keep things on a more equal footing.)

* Govt proposes RM50 service tax on each principal credit card, charge cards, including free cards. RM25 for supplementary cards by January. (Could AEON Credit be affected, guess so, we really need just one card people, any more than that is license to fuck ourselves up.)

* Govt to impose RM10,000 for each approved permit to open AP holders, for distribution of AP in 2010. (Not good enough, needs to place a timeline to scrap it, say within 3 years, and the levy needs to be closer to market price of RM30,000.)

* Govt to implement fuel subsidy management system in early 2010, using MyKad, to ensure targeted groups will benefit.

* Govt to reduce maximum individual income tax rate from 27pct to 26pct, personal relief increase from RM8,000 to RM9,000 in 2010. (Cannot complain but we need the top rates to come down some more to incentivise entreprenuers. If the money makers are not making money, the ones below will not do well.)

* Govt to launch scheme for EPF contributors to use current, future savings in account 2 to get higher financing to buy higher value house or additional houses. (Need deatils but generally positive.)

* Govt to issue 1Malaysia sukuk totaling RM3b, for Malaysian aged 21 and above. 3yr maturity, with 5pct annual rate of return

* 1Malaysia retirement scheme for self-employed, run by EPF. For every RM100 contribution, govt to contribute 5pct, maximum RM60.

* Personal tax relief raised to RM7,000 from RM6,000 now for EPF contribution and life insurance premiums. (We should have a timeline, RM1,000 increase every year till RM10,000.)


p/s photos: Noon Wongsawan

The M'sian X-Files - Intricacies Of The New FBM KLCI

There is a lot of new information that one can get on the new index, which will help us to understand the index and the markets better. It will also help to get a better grasp as to the "integrity of the FBM KLCI" when it rises and falls.

a) Its just 30 counters instead of the old KLCI which had 100 counters.

b) The new index addresses issues such as liquidity and free float, and let's face it funds in general are really looking at just the top 30... heck throw in another 20 stocks and that's their universe.

c) There is a good chance that the 30 stocks will start to be traded at a premium to the rest as these are the must haves for all indexed funds, by all the big and small local funds, and by most of the foreign fund managers managing Asian portfolio so as to not be under performing the Asian benchmarks.

d) Having said that, part of the rise in the FBM KLCI over the last 2 weeks may be attributed to some of these sustained 'enforced buying' activity rather than by genuine equity players.

e) The new index is a skewed index. Banks and plantations alone have a total weighting of 55%. If you have banks, plantations and telco = 63%. If you add banks, plantations, power, gaming and telco = 85%. So, technically a fund manager need only look seriously at these FIVE SECTORS alone to do well, forget about the rest.

f) The new index will also affect how research houses form their analyst teams. They must cover the 5 sectors, there are 9 sector that are not covered by the new index. It is very likely that analysts in the following sectors better start covering a more important sector in order to stay relevant. The following are the 9 sectors that are deemed as "irrelevant", "need not exist", "unimportant to the Malaysian economy", "unnecessary to look at in order to gauge the overall health of the economy": technology, transportation, property, timber, insurance, construction, building materials, hotels and industrial products. Go figure!

g) The new index will make it that much "easier" for the index to be controlled - conspiracy theorists will agree with me whole-heartedly that this is to allow PNB-EPF-MOF-EPU to control the index better. So, the next time we see a major market correction, we may be able to withstand it better with the new index as all it takes is to mop up the 30 stocks ... even though those stocks outside of the top 30 may be seeing their share prices tumbling like a rock. Managed perception more important la... than real effects to the economy. Hey, like that, we may never ever see a major correction in the FMB KLCI... ever... especially if we keep launching new big funds to mop these buggers up. But I am only guessing here.

h) Now let's consider the sin stocks, gaming and tobacco, they account for 12% of the new index. This is an important consideration as most of the big local funds will not be touching these stocks. Can you "not be in control of the 12% of the index" and still manage funds that is compared to the FBM KLCI benchmark? If these 12% of the new index starts a bull run on its own, most of the local funds will be under performing the new index. Can you all see a danger here??? Staring at you in the face!!! The danger is ... if there ever occurs a situation where you get the gaming and tobacco stocks to be in a strong bull run outperforming the rest of the new indexed stocks ... could we safely say that the EPU-MOF will not be strong-armed or "influenced" by certain parties to "whack down the sin stocks" with excessive punitive measures ( additional gaming and duties above and beyond what is normally expected in a financial year)???

g) If you take Khazanah, Petronas and PNB as the investing triumvirate ... the 3 already control 12 out of the 30 stocks in FBM KLCI. If you are a nasty anti-government critic, you have enough loose thoughts to take this factor to the next level. I am not saying its a negative or a positive, but its a fact that is worth remembering. Be careful, as the greater the influence one has, the greater the responsibility to be prudent, transparent and professional.

h) Though most fund managers will want to stick to the FBM 100 as the benchmark for their performance, it will not be so easy. The drivel, the propaganda and focus have all been set to make FBM KLCI the index to watch, and because it was kinda close to the level where the old KLCI was, most will tend to take to this new index. Its much harder if you switch from a 1,100 index level to a 9,500 one ... kudos to the planners.

i) Of course detractors will point to the fact that the venerated Dow Jones Industrial Index is only made up of 30 stocks, and is an often quoted barometer, even though most professional funds benchmark their performance to the broader S&P 500. The big difference is that it will be a hundred times easier to try to "manipulate" the FBM KLCI than the Dow Jones Industrial Index. Actually, pick just any two stocks in the Dow Jones, I am VERY SURE the market cap of any two stocks will be bigger than total market cap of ALL stocks listed on Bursa - in fact just any ONE stock in the top 10 of DJIA will be enough to cover the entire market cap of Bursa. Not to belittle FBM KLCI but to put things in perspective.

Can I have my Datukship now??!! (yea, I don't really need one or want one... but I want to get on and off my plane faster la...).


p/s photos: Yukie Nakama

Decoding PNB's Investment Strategy Ahead

Time to try and decode PNB's investing strategy, as some have voiced concerns over its last few fixed priced funds, and its ability to maintain those returns. Some of the information have been extracted from articles in The Edge.

Four of the 10 PNB funds are known as fixed-price funds where the price per unit is fixed at RM1 regardless of how the market performed. There is a history behind this practice. The first PNB fund, Amanah Saham Nasional, was launched as a fixed-price fund in 1981 but it reverted back to market pricing in 1991 as per the trust deed. Soon after that, Amanah Saham Bumiputera, a fixed-price fund was launched in 1990 for investors not accustomed to market fluctuations. Altogether, there are four such funds by PNB.

Fixed-price funds are practically risk-free as investors get back whatever they put in if or when they redeem their investments. On top of that, you get generous returns of 7% to 8% every year. It is a very good deal indeed but on the other side of the coin, the actual value of the underlying investments is unknown, unlike other unit trust funds where you know the value of your investments at any point in time. The balance sheets of fixed-price funds are not disclosed in their annual reports, and the Securities Commission, the body governing the unit trust industry, grants these funds various exemptions from its guidelines on unit trust funds.

How can a fund keep paying 6%-8% a year in dividend, invested 60%-90% in local equities, and will always have a fixed price of RM1 NAV. You cannot get that anywhere else, can you? Is anybody even a bit curious? PNB is not almighty. What about the 1997-1998 Asian crisis, the Internet meltdown, the 9-11 period, the SARS debacle, and the very recent subprime global meltdown ... surely we all saw that equity prices were hammered for an extended period.

The way PNB would argue is that they do income smoothing, or something along those lines. That in good year, say they get an 11% return, they will keep some of the gains and declare only 7% in dividends. The excess would go into a special performance account to top up future years that they do not have stellar dividends. That sounds alright except that you still did not know the exact real NAV of these funds.

PNB could very well be paying 6%-8% dividend every year on these fixed price funds but the real NAV may be deteriorating below RM1.00, and we don't know because its not known. Should we be concerned if the actual collective real NAV of these fixed priced funds were to be say RM0.97, RM0.93 and RM0.88 for 2006, 2007 and 2008 respectively??? We can only assume that their real NAV is healthy.

In good or bad markets, the funds have consistently returned steady dividends in the high single digit. But the fact is, the returns are lower today than in the 1980s and 1990s when dividends and bonuses were in the double-digit realm (as high as 20% for ASN in 1981). But no one is complaining about the 7% to 8% annual return today considering that investments in the fixed-price funds are essentially risk-free — you get your principal back when you sell your units.

PNB is a unique institution. I can understand how they can generate double digit return in the early years (PNB was established in 1979). Pernas, which had been acquiring public-listed companies under foreign control, was compelled to transfer 13 of its companies, including Sime Darby Bhd and Malaysia Mining Corp Bhd, to PNB at cost. Malayan Banking Bhd was transferred to PNB after Bank Negara Malaysia stepped in to restructure the bank in 1967 following a bank run, which wiped out 40% of its deposit base. PNB also benefited from grants and interest-free loans from the government to facilitate the acquisitions. By 1989, PNB had transferred to ASN sizeable stakes in various listed entities. Similarly, ASB’s assets comprised those transferred from PNB. Furthermore, as a bumiputera institution and one of the biggest institutional investors in town, PNB is said to have been allotted shares in companies en route to listing at attractive prices, given the need to meet the 30% bumiputera shareholding requirement.

In the 90s PNB still had its channels as many big companies got listed, and IPOs generally performed outstandingly during the early 90s bull run. Over the last few yers, these mega IPOs have dried up. PNB will now have to rely on corporate finance and restructuring to generate value to its stable of companies. Hence, arguably, the Sime Darby's mega plantation scheme is the start of many more projects under PNB's auspices. PNB will now have to consolidate its stable of companies, put them into synergistic groupings to create more value. All that is very necessary to continue to support these fixed priced funds that still give 6%-8% dividend income every year and can always be redeemed at RM1.00 par.

So, the scepticism over PNB's ability to maintain these returns is genuine and needed to be asked. As to whether they can do it depends on execution, the advisors they have, and how astute they are at not just managing funds but including appointing the right people to manage the synergies and put the collective resources to work. Sime Darby is still digesting the huge plantation firms acquired. It is imperative that PNB maintain a very high standard of professionalism in its retention of top management executives in running these merged entities. PNB has to minimise the political interference to have political appointees - it has to manage with clear transparency with global best practices as their mantra.

The next big project for PNB has to be its many property companies under its stable. PNB have SP Setia and Mah Sing, and its stakes in these companies have been "rising strategically". In contrast, PNB has accumulated almost 20% in Mah Sing and has direct and indirect interests of close to 32.9% in S P Setia. Another company that PNB has bought a stake in is I-Bhd, where it has 18.1%. Sime Darby Property could be better placed in a property conglomerate as it has the largest landbank in the country. Sime Darby’s landbank in the Klang Valley stretches from the Guthrie Corridor in the north of Selangor, to Putrajaya, Seremban and Port Dickson. The 37,000 acres in its landbank is about as big as Kuala Lumpur and three times the size of Putrajaya.

PNB took Petaling Garden Bhd, Island & Peninsular Bhd and Pelangi Bhd private between 2005 and 2007. The three collectively own 7,200 hectares of land. Apart from land, PNB also has buildings in prime locations that can easily be packaged into a real estate investment fund (REIT). Within its fold is also Syarikat Perumahan Pegawai Kerajaan Sdn Bhd (SPPK), which has a good property development record. Because of its huge landbank, Mah Sing and S P Setia are said to be possible vehicles for PNB to unlock value.

It looks increasingly like PNB want Sime Darby to concentrate on plantations. Hiving off SDP to a merged Mah Sing-SP Setia vehicle would probably yield great value to Sime Darby and ramps up PNB's control in Mah Sing-SP Setia. PNB holds about 53% stake in Sime Darby, which wholly owns Sime Property.

Imagine if PNB injects the three property developers – Island & Peninsular Bhd, Petaling Garden Bhd and Pelangi Bhd – all privatised between 2005 and 2007, as well into the merged SPSetia-Mah Sing vehicle. Its a mega property concern for sure. The good thing is that it can consolidate its landbank in one major masterplan and plan much better strategically. It will be much better capitalised as well to venture into new markets with various "brands" for the right markets.

I doubt very much PNB will take SP Setia or Mah Sing private. Injecting what they have into SP Setia-Mah Sing would make much more sense. The whole shebang would require massive amount of capital for development and venturing into new markets, you wouldn't want to take that onto PNB's balance sheets as we could be talking in billions of ringgit every few years.

Other institutional shareholders of SP Setia include the Employees Provident Fund with 12%, Capital Group of the US also with 12%, and other foreign shareholders which hold another 14% in the company. On June 18, SP Setia announced the appointment of two nominees of PNB – Tan Sri Wan Mohd Zahid Mohd Noordin and Datuk Noor Farida Mohd Ariffin – as its new non-independent and non-executive directors. SP Setia’s two executive directors – Khor Chap Jen and Teow Leong Seng – resigned from their positions on the same day. However, both remain with the company in their existing capacity as executive vice-president in charge of property division (central) and executive vice-president/CEO of international business development respectively.


p/s photo: Maya Karin

Clarifying Your EPF Beneficiary Status

Reuben Puan wrote to Soo Ewe Jin of Star Biz on some EPF matters on beneficiaries. Soo forwarded the mail to EPF and got the official reply from EPF. The subject matter is important, do read the content and see if your beneficiary for your EPF and prevalent issues need your further attention:

Dear Reuben,

Thank you for your query which has been referred directly to me by Mr. Soo Ewe Jin.

Please find our responses below:

1. What precedes the EPF......the will or the EPF nomination?

The EPF nomination will always supercede the will.

2. Suppose I nominate 25% each for my son and daughter and the remainder 50% for my spouse, if an accident were to befall both of us, then what happen? Will my children be getting 50% each automatically?

Should an EPF member dies at the same time as his or her nominee, the nomination portion that was bequeathed to that nominee will be invalid. Therefore if an accident were to befall both you and your spouse, 50 percent cent of your EPF savings or the nomination portion which has been bequeathed to your spouse will be invalid.

This 50 per cent will be subjected to procedures under 'EPF savings without nomination' in which the first priority for the right to claim the member's savings goes to the appointed administrator of the deceased member's estate.

This therefore means that 50 per cent of your EPF's savings will not be paid automatically to your children.

3. Furthermore, if fate would have it that the 4 of us suddenly meet our maker, then what is the outcome?

The same principle applies as above i.e. the nominations will be invalid. In such a case, withdrawal of EPF savings will be subjected to procedures under EPF savings without nomination' in which the first priority for the right to claim the member's savings goes to the appointed administrator of the deceased member's estate.

I hope the above answers have helped to shed some light to your queries. If you have any other queries, please email me.

Thanks and best regards,

Nik Affendi Jaafar

General Manager,
Public Relations, EPF



p/s photos: Li Xiao Lu

No! Not From The EPF Please!

Saw this in Malaysian Insider: KUALA LUMPUR, July 28 — A government agency which is administrating two schemes under the first economic stimulus package is in talks with the employees’ pension fund for a RM5 billion, a business daily said.

The Malaysian Reserve, citing an unidentifed source today, said the Employees’ Provident Fund (EPF) was ready to fund the loan at an undisclosed rate to Prokhas, the government-owned special purpose vehicle.

The source added that Prokhas was also looking at other financing options including government bonds, private debt securities or a term loan that may give more competitive rates. Malaysia announced its first stimulus package of RM60 billion in March to shore up the export-reliant economy against the global economic crisis.

Prokhas manages two schemes under the package and was allocated 5 billion ringgit each, known as Working Capital Guarantee Scheme and the Industry Restructuring Loan Scheme, which is under the Ministry of Finance.

EPF’s talks with Prokhas may draw some criticism, as loans to government agencies and corporations have in the past been called bailouts for poorly performing local companies by critics and the resurgent opposition.

In 2008, the government said it would transfer RM5 billion from the EPF to state owned fundmanager Valuecap to be invested in undervalued Malaysian stocks. — Reuters

----------------

I can understand, even though I may not fully support EPF's role in lending to Valuecap, it is still a legitimate usage of funds to invest in equity. The rumours that Prohas is asking for RM5bn from EPF needs to be stopped even before it gets to Najib's desk. Past experiences have told us that the majority of loans to government agencies and corporations did not have a happy ending. History will tell us that in the end, the government will end up making up for the losses, in this case when EPF loses money on the RM5bn causing the public to be in total disgust.

People can understand why they lost money when its in stocks. People will not be so understanding when its used as Working Capital Guarantee Scheme and the Industry Restructuring Loan Scheme. There have been many great and long serving public servants, making damn sure over the decades that the EPF remains an institution of integrity, where the contributors' savings can be managed responsibly for their retirement. DO NOT undo the decades of disciplined investing philosophy by "forcing" EPF to do this - working capital guarantee and loan restructuring... certainly not EPF's forte, and neither do I think Prokhas has an edge in doing this. There is no guarantee of a return, its corporate restructuring, recovery, rehabilitation, valuation & disposal, breakup value assessment, etc .... certainly not EPF's normal mode or channel of investments.

EPF can and should only expose itself to a certain kind of risk (and its usually very very low). What risk are we exposing EPF to when it starts to "lend" this RM5bn?

Even if Prokhas can get the government to guarantee EPF's money and even a decent return... guess whose money is the government using to repay EPF??!! Its still our money. Just because we use different terminologies or canisters, it does not mean the money somehow does not belong to the people. I hope this will remain as just rumours.

If the scheme is solid and has the structure to stand on its own, go raise the funding from overseas banks. Why I don't see the Japanese, US or European banks and investment bankers lining up for this??? If this can only be "sourced locally", ask ourselves why... don't kid ourselves. If the foreign banks will not fund this, ask why. This is NOT to say we should not do this... in fact I think we should... but don't la play-play with EPF's money, its not a standby ATM-piggy bank for all to rape.

Dudes .... please...

p/s photos: Stephy Tang Lai Yan

Revamping Our Pension Scheme

• News reports indicated that the government will roll out a private pension scheme initiative by the middle of next year, as part of its reforms to the existing pension funds industry.
• Securities Commission task force will submit a report on the private pension scheme to the government in the next six months.
• "There will be three legs under the pension reforms - the government pension scheme, the EPF and the private pension funds," he said. Nor Mohamed said the EPF scheme will be reviewed since the government does not want one fund to constitute the major portion of the Malaysian capital market.

My views:

- Will this mean EPF does not have the capacity to invest more funds? Or is EPF running out of local cagamas / bonds to park the funds to?
- EPF might be taking the proper route here in that it can only manage a certain projected return of 4%-6% if 70% of their funds are in top rated ringgit papers, the rest primarily in local stocks and the rest in overseas stocks. If they put too much in foreign currency bonds or foreign stocks, EPF will have a lot less control of the investments. The foreign currency aspect will swing returns to unacceptable territory. How would you like your EPF annual returns to be swinging between the range of -3% to +8%?
- The major development is to help cover those 2 million currently outside the ambit of EPF, that is a noble thing to do.
- The secondary objective is to provide "approved funds" to take the burden off EPF. If it was up to me, I would suggest that one should have the option of putting 50% - 100% of contribution for EPF to manage. If you wish, you can allocate up to 50% of your EPF funds into approved funds.
- Let's remember the wonderful example of the USA's 401k, you get to choose to put your 401k into funds. Many people lost 30%-60% of their 401k. Now please imagine losing 30% to 60% of your retirement EPF funds in just one year.
- Sure you could also get those who can get superior returns in the 401k, but is that what a superannuation fund is for? You do not need the 20%-30% return a year for something like your superannuantion fund. First objective of a super fund: DON'T LOSE ANY MONEY. Second objective: Make something decent that is a bit above prevailing interest rate.
- Anything more than that will result in greater returns, yes, but as well as greater risk. Talk to those who lost 30% to 60% in their 401k, I am sure they would have loved to have been in EPF from day one.
- Some who speculate that compulsory contributions to EPF will be cut is looking at the wrong angle. Overall contributions won't be cut, but the public will have the choice to allocate to other approved funds.
- This WILL NOT mean EPF will then cut their stakes in local companies, that is flawed thinking. EPF will not need to cut its stakes at all.
- The SC will have to be very careful in selecting the approved funds. I hope not to see favouritism. Approved local funds should have size (proven size, managed decent sums before, RM300m for equity, RM1bn for bonds), proved records for at least 3 years, preferably 5 years. I would want to see some foreign funds being approved as well, the criteria could be more stringent, minimum US$500m for 5 years of beating respective benchmarks, US$3bn for bond funds and minimum 5 year track records. Some attention should be paid to foreign currency exposure - while most international funds are valued at USD, a fund that is somewhat "hedged to the ringgit" will help. For example if Aberdeen Asset wants to be an approved fund, it will need to mark their returns for that fund back to ringgit even when running a foreign equity or bonf fund.
- When selecting an approved fund, do not get bogged down using too many parameters. The alphas, betas and gammas can be very distracting. The risk measure is ok as its a good indicator to see how much risk is required to get their required returns. Turnover is a so-so measure, let the fund manager manage his/her way. Is it a personality driven fund or otherwise, state out how you would regard each category, what to do when the star fund manager leaves. I would watch closely the cost of entry and exit as this is public money. I would strongly advise to have lots of indexed funds, which will have very low management fees (many are below 0.75% p.a.). Many funds have to charge 3% to buy into their funds because they rely too much on agents, discard them. If you want to be an approved fund, entry/mgmt fee together should not be more than 1.5% p.a., the public should not have to bother with the fact that you do not have size. Its not a personal investment issue, its a national retirement fund.
- While we are at it, revamping EPF, please come up with a viable ANNUITY plan. Its a simple plan, it has been mooted before, why are the insurance companies so greedy - kick out those greedy ones. This is very pressing because we know that more than half of all retirees finish ALL their EPF monies within 3 years. That defeats the purpose of retirement income.
- An ANNUITY plan would allow pensioners to buy units of Annuity for life. For example, if it cost RM60,000 for one unit that would pay RM500 per month for life ... (an expert could come up with a more realistic calculation, I am not an actuary). Then one could buy 3 units for RM180,000 upon retirement and will be guaranteed RM1,500 tax free per month for life, and so on.
- It does not have to be compulsory, but there has to be a credible choice upon retirement.




p/s photos: Cherry Ann Kubota