A workers' picket today drew a 500-strong crowd to the Employees Provident Fund (EPF) headquarters in Kuala Lumpur, demanding upward revision of the dividend rate to 5 percent from the 4.25 percent declared for 2002.

Organised by the Malaysian Trades Union Congress (MTUC), the workers handed over a 12- point memorandum to EPF chairperson Abdul Halim Ali, deploring the lowest ever dividend payoff in 40 years.

'Unwise investments'

Apart from the protest in KL, pickets were also mounted outside the EPF branch offices in Johor Bahru, Ipoh, Kuching, Penang and Seremban this evening.

MTUC president Zainal Rampak said the memorandum would be presented to Prime Minister and Finance Minister Dr Mahathir Mohamad tomorrow.

The document, signed by Zainal and secretary-general G Rajasekaran, proposes that the minimum acceptable dividend rate be set at 5 percent. The current minimum rate of 2.5 percent. has not changed since the EPF Act was last amended in 1952.

Zainal blamed the low rate for 2002 o­n "mismanagement of workers' money entrusted to the EPF, founded o­n unwise investment decisions".

For example, he said EPF subsidiary Malaysian Building Society Bhd had sustained a RM2 billion loss for investing in housing development companies "of ill-repute", rather than supporting housing loans.

Additionally, the EPF had suffered a RM15 billion paper losses in recent years due to allegedly imprudent investments.

Dividends compared

Rajasekaran said this year's dividend could easily be set at 5 percent, all economic factors considered.

He also said the provision for the RM15 billion loss sustained in past years could have been deferred, so as not to impact so severely o­n workers' incomes.

"There was no proper negotiation (with workers) prior to the announcement of the 4.25 percent dividend rate," he claimed.

"Despite our meeting with both Deputy Finance Minister Jamaludin Jarjis and Acting Prime Minister Abdullah Ahmad Badawi, the announcement was still made."

Rajasekaran pointed out that organisations like the Armed Forces Board Fund (LTAT) have been able to maintain the annual dividend rate at the constant of 10 percent despite the gloomy economic outlook.

"The government's excuse is that the LTAT was able to obtain special offers o­n shares. Why is it that the government cannot do the same for the EPF? Aren't workers' incomes important too?" he asked.

He said MTUC expects to hear from all involved parties in about two weeks, after which the MTUC general council would convene again to discuss the next course of action.

When the picket was planned last month, the Human Resources Ministry advised union affilliates to refrain from action given the current economic climate. It said the picket, not being related to trade disputes, would be illegal.

Zainal, meanwhile, was criticised for failing to represent the MTUC at the EPF's April board meeting in which the dividend rate was announced..

Twelve proposals

Among the key proposals in the memorandum is to increase EPF contributions by employers from 12 per cent to 17.5 per cent, and by workers from 11 per cent to 13 per cent. ( See Chart )

This would place the employers' contribution o­n par with that of the government's monthly contribution to the Consolidated Pension Fund.

It would also overcome consumer difficulties associated with purchasing power parity in relation to the shrinking value of the ringgit, thus ensuring that workers can see their pension last into old age.

The memorandum calls for strict and speedy enforcement against employers who fail to remit contributions.

Another recommendation is to restructure the composition of the EPF Board of Directors, currently comprising a chairman, 5 representatives each from government, employers and employees, and 2 independent members.

The memorandum says Section 4 of the EPF Act should be amended to allow for 10 representatives of workers, and 4 each from employers and the government, including the chairman.

Also suggested was for the investment panel to include nominees from organisations that are most widely representative of workers. The panel should report directly to the board and not the finance minister.