The Employees Provident Fund (EPF) is concerned that some contributors, upon retirement, would finish their savings within three to five years. This is a legitimate concern especially when the average lifespan of Malaysians has increased considerably over the years.

However, as a superannuation institution, EPF should be more concerned with how it manages the funds rather than on how the contributors use their money after their retirement.

EPF has many advantages when compared with other fund managers. It has regular supply of funds from contributors each month. The contributions are for long-term, as long as the working lifespan of contributors. Contributors have no access to their money unless under special provisions for housing, medical treatment or limited withdrawal for investment in unit trusts.

With very stable and predictable source of funding, EPF should be able to make better investments for the benefits of contributors.

EPF money is the blood and sweat of the people. For decades, it has been the main lender to the government, earning ‘risk-free’ rates. As a developing country, lending EPF money to the government is not necessary a bad thing, especially for development projects implemented prudently.

The EPF has no control over the salaries of workers (and hence the amount of their EPF contributions). However, EPF will determine the ‘growth’ of these contributions over many years. How much a retiree will eventually get is dependent on two factors - the amount contributed and the returns generated over the years. We should not underestimate the power of compounding.

I believe the EPF has professional fund managers able to discern good investments from the bad ones. However, the most important factor is how independent is EPF able to exercise its professionalism. Is EPF subjected to constant outside influence and interference?

It is good to know if EPF had divested its investment in Felda Global Ventures Berhad (FGV) purely based on its professional judgment. How much did EPF lose just in this one single investment alone? How much more must EPF make in other investments in order to recoup the loss in FGV?

Returns of investment are important; otherwise we could be using new contributions to pay off the old ones. With growing population and work force, it is sustainable to use the new contributions to pay off the old ones. However, the crunch will come when the population is ageing.