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New syariah-friendly EPF will further divide us, says MCA man
Published:  Jun 23, 2016 12:02 PM
Updated: 6:20 AM

The government has been urged to scrap the Employees Provident Fund's (EPF) new syariah scheme, as it may deepen racial and religious segregation.

Former deputy minister of youth and sports Gan Ping Sieu said the new scheme starting Aug 8 this year would result in two parallel pension schemes that may result in different returns for contributors.

"With two parallel schemes running, it is likely that their dividends would differ from time to time.

"This would create a sense of injustice among contributors, which could take a racial-religious dimension.

"Inevitably, there will come a day when Malaysian employees' retirement savings are determined by the religion they profess in," said Gan, who is Centre For A Better Tomorrow co-president.

He said the pursuit of syariah compliance in the EPF would cause "further division" in Malaysia's multicultural society, and is counterproductive.

For example, he said, having a separate syariah compliant scheme inevitably gives the impression the original scheme's investments may not be halal.

"This is not healthy in a plural society where we should embrace diversity and not allow our religious differences to further divide us."

Concerns over non-halal investments by EPF could be solved with the present scheme being selective, he said.

"It can choose to stay away from investments in the gaming or alcoholic beverages industries.

"Having only one scheme for all contributors is fairer and just," said Gan.

'Open to all races'

On Tuesday, Bernama reported EPF chief executive officer Shahril Ridza Ridzuan saying contributors can now convert their EPF funds to the new 'Simpanan Syariah' savings account.

The syariah-compliant account will be launched next year but contributors can register for it from Aug 8 to Dec 23 this year.

"What is interesting about Simpanan Syariah is that it is open to all members regardless of race, religion or nationality," Shahril Ridza said, adding that contributors just have to bring their identity cards to any EPF branch to verify their thumbprints.

However, he said, contributors were only allowed one EPF account, either the current conventional savings account or the Simpanan Shariah.

Speaking at a press conference on Monday, Shahril Ridza said EPF had allocated an initial fund size of RM100 billion for Simpanan Shariah.

Shahril Ridza also said that EPF had set up a Syariah Advisory Committee which would oversee the management of Simpanan Shariah.

"The committee is made up of five people who are qualified in the field of syariah and have wide knowledge or experience in various areas such as banking, finance, legislation and other related disciplines," he said.

The committee is chaired by assoc prof Mohamad Akram Laldin (executive director of International Shariah Research Academic for Islamic Finance) while the other members are lecturer at the Institute of Islamic Banking and Finance at the International Islamic University Malaysia (UIA), assoc prof Aznan Hasan and lecturer in UIA's department of economics and management science, Zaharuddin Abdul Rahman.

Lecturer at UIA's Institute of Islamic Banking and Finance prof Engku Rabiah Adawiah Engku Ali and senior lecturer in the Academy of Islamic Studies, Universiti Malaya, Kamaruzaman Noordin.

The Star on Tuesday also reported Shahril Ridza saying the fund had already been investing in syariah-compliant assets for more than five years, and about 45 percent or RM295 billion of existing total assets are already syariah-compliant.

He projected EPF’s investment in syariah-compliant assets would grow by roughly RM25 billion a year on average.

He added it is not practical to expect the present EPF investments to be completely syariah compliant.

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