Workers are cautioned not to opt for the Employees Provident Fund Annuity Scheme (Epfas) despite EPF's assurance that there was overwhelming response to the newly launched scheme.

There is no guarantee for "good" returns, unlike the EPF savings which attract an annual dividend, said Malaysian Trade Union Congress (MTUC) secretary-general G Rajasekaran.

Rajasekaran said that everything about the Epfas was uncertain, especially the bonus element because that depended very much on the profits of the insurance company running the scheme.

He said that if the insurance company experience losses, there is no certainty for payment of a bonus that is being promoted as a benefit of Epfas.

He was commenting on EPF's press statement yesterday that MTUC analysed the scheme without taking into account the bonus offered at the end of the year ([#1] Don't opt for EPF annuity scheme, says MTUC [/#], Aug 18).

EPF also claimed that it had received an "overwhelming response" with a total value of RM160 million in single premiums since the launch of Epfas on July 1.

"Until today, people still think that they will receive RM1,200 per month instead of the actual RM100 per month," said Rajasekaran.

"People are responding to the scheme because they do not know much about it," he added, claiming that EPF did not explain the scheme to members.

Last Friday, MTUC advised some 540,000 members not to opt for the scheme because they would generally suffer losses. The recommendation was based on a study conducted by the Consumers Association of Penang (CAP) about the scheme.

Among other things, the study highlighted the scheme's low rate of return (the lowest being 3.2 percent) compared with EPF's annual dividends (which last stood at 6.7 percent).

MTUC's concerns

MTUC remains wary about EPF's motives in handing over the project to insurance companies which have reportedly sent agents to factories offering commissions and holidays to contributors who join the scheme, said Rajasekaran.

He also raised the question why EPF itself did not run its own annuity scheme since EPF has a staff of 4,000, 9.6 million contributors and its office is technologically advanced.

MAA Holdings Bhd was quick to defend EPF's position.

According to MAA department manager YC Chan, EPF had studied the pension scheme for four years and found it beneficial for workers but decided not to conduct the project itself because it lacked the expertise.

"We achieve about RM10 million sales daily, which means about 30,000 units are sold per day," he said, supporting EPF's claim that the response to the Epfas was overwhelming.

The scheme also offers a 10-year guarantee for members' next-of-kin. In the event of the death of a member within the first 10 years of the period covered, his or her dependents will continue to receive monthly payments for the balance of the period.

"However, this will not apply if the contributor had enjoyed 10 years' monthly income and bonus after his retirement," explained Chan.