LEMBAGA KUMPULAN WANG SIMPANAN PEKERJA

annual
L E M B A G A
K U M P U L A N
E mpl o y ees
WA N G
pr o v i d en t
rep o r t
S I M PA N A N
f un d
b o ar d
2 0 1 5
P E K E R JA
Lembaga Kumpulan Wang Simpanan Pekerja
Employees Provident Fund Board
Annual Report 2015
members
EMPL0YERS
14,550,355
of whom
6,794,604
536,489
are actively
contributing
c o n t ribu t ing t o t h e E P F
RM59,977.63million
employees
in annual contributions
from employees and employers
RM44,248.11million
total investment assets
RM684,526.44million
up
7.54%
in total
withdrawals in 2015
TOtal GRoss income
RM38.24
million
RM39,076.48 million
in 2014
2
from
RM636,534.81 million
in 2014
dividend rate
RM44,234.03
from
employers
billion
up
13.20%
6.40%
dividend payout
Lembaga Kumpulan Wang Simpanan Pekerja
Employees Provident Fund Board
Vision of a Comfortable Retirement
Open
The three main components of a comfortable retirement are FINANCIAL SECURITY, GOOD HEALTH and a HAPPY
AND MEANINGFUL LIFE.
Financially Secure
Healthy
Happy, Meaningful Life
• Consistent and secure income for life
• Medical and life insurance
• Debt free
• Having a decent place to call home
• Mentally and physically healthy and active
• Independent and mobile
• Healthy lifestyle (leading to lower medical
expenses)
• Strong bonding with family, relatives and friends
• Family and community support to care in
times of need
• Stay engaged and productive in community
• Access to elderly-friendly facilities
The above ASPIRATIONS FOR A COMFORTABLE RETIREMENT are aligned with the EPF Vision and Mission to
provide the best retirement savings for our members.
EPF aspirations in the next five years
Aiming to create a better retirement future
At least half of our members
meeting minimum basic
savings according to age band.
Members are empowered
to make informed financial
decisions and choices that
are aligned to their lifestyles
and values.
Members can rely on
multiple income sources and
protection to mitigate against
longevity risks to supplement
EPF retirement savings,
resulting in sustainable
retirement for life.
Strong and sustainable social
protection for the elderly in
place for members to achieve
retirement well-being.
Understanding and determining DESIRES, WANTS AND NEEDS is the foundation towards achieving a robust and
healthy financial standing.
rmati on
Info
>> Desires
>> Wants
>> Needs
What does it mean to be financially healthy?
Percentage of income
going into savings
Sustainability of
‘Rainy Day’ Funds
%
Replacement Rate of Last
Drawn Salary*
months
>
%
*Depending on lifestyle, affordability and goals.
Lembaga Kumpulan Wang Simpanan Pekerja
Employees Provident Fund Board
CURRENT RETIREMENT SCENARIO IN MALAYSIA
MORE THAN HALF OF MALAYSIAN HOUSEHOLDS HAVE NO FINANCIAL ASSETS; one in three Malaysians do not
have a savings account.
Financial Reality of an Average Malaysian
No Financial Assets *
Households with Zero Savings
(Financial Asset is an intangible asset where value is derived from a contractual
claim, such as bank deposits, bonds and stocks.)
Non-Malay Bumiputera
Malay
Chinese
57 55 45 44
%
%
%
%
90%
86%
Rural
household
Indian
Urban
household
Source: The Malaysia Human Development Report 2013,
United Nations Development Programme (UNDP).
Malaysians need to be EMPOWERED AND TAKE CHARGE of their own financial decisions according to their life stages.
Financial life cycle
Working Phase
Retirement Phase
(Accumulation of Wealth Phase)
Young
Workforce
18 - 30
Mature
Workforce
(Decumulation of Wealth Phase)
Active
Ageing
Experienced
Workforce
25 - 45
40 - 60
years old
years old
Young and single
Education loan
House rental
Start a family
Buy house/car
Family Protection
Pay Debt/Wealth
Accumulation
Passive
Ageing
55 - 70
years old
65 - 80
years old
Children’s Education
Wealth Accumulation
Wealth Protection
Retirement Planning
Frail
Old
90 +
years old
Change Lifestyle/Debt-free/Travel
years old
Debt-free Medical Cost
Elderly Care
Growth of EPF Savings
Moderate amount but
increasing gradually
Very minimum amount
Increasing rapidly
(compounding
effect and higher
contribution)
•
•
•
•
Start Retirement Life
Start using retirement savings
EPF savings reducing gradually
EPF savings used up completely
Options to diversify your nest egg
Savings
•
•
•
•
•
EPF Savings
Private Retirement Scheme
Personal Savings
Fixed Deposits
Others
Protection
•
•
•
•
•
•
Life
General
Medical
Annuity
Education
Estate Planning
Investment
•
•
•
•
•
Unit Trust
Securities
Bonds
Commodities
Real Estate
•
•
•
•
Phased withdrawals (EPF and personal savings);
Annuity payment; and
Protected by healthcare/other insurance; and
Bequest
Lembaga Kumpulan Wang Simpanan Pekerja
Employees Provident Fund Board
Annual Report 2015
CURRENT RETIREMENT SCENARIO IN MALAYSIA
Malaysia is fast heading towards becoming an AGED NATION BY 2030, where 14% of the population will be
60 years old and above.
Longevity risk
2,805.9
115
france
0
50
100
400
0
150
• The interval in which the percentage of
population age 65 and above doubles from 7
to 14 per cent.
• Malaysia is ageing faster than other countries
Young-Old
60-69
50
47
Middle-Old
70-79
30
20
10
0
Old-Old
80
2015
YEAR
• The elderly group will double/triple within 15
years (2015 – 2030)
Source: National Institute of Aging, USA, “Why Population
Aging Matters: A Global Perspective” (2011).
60
55
50
Male
sweden
70
40
293.6
800
72.9
Female
85
757.3
1,200
947.8
1,600
69
united
states
77.6
73.5
Male
2,000
45
united
kingdom
78.2
80
Female
2,400
1,485.7
26
japan
2,098.0
2,800
1,719.9
CHINA
2015
2020
2030
Male
3,200
26
Female
(,000)
604.5
25
MALAYSIA
Malaysians are living longer
Longer retirement period
Projection of the elderly population in Malaysia
395.1
Malaysia ageing rate against other countries
1990
1950
• Average life expectancy is approximately
75 years old*
• Retirement savings withdrawal is still at 55
years old since 1952
Source: Department of Statistics, Malaysia, “Population
Projection 2010-2040” (2012)
*Source: United Nations Population Division
There is an urgent need to establish a HOLISTIC SOCIAL SECURITY FRAMEWORK AND INFRASTRUCTURE to
streamline all the social security programmes in Malaysia.
Fragmented Malaysian Social Security Infrastructure
A holistic approach is urgently required
World Bank’s Pension Conceptual Framework
State
Base or social pension
• 1Malaysia Book Voucher
• Karisma, Jabatan Kebajikan
Masyarakat Malaysia
• BR1M, Bantuan Rakyat
1Malaysia
Mandatory
Mandatory
Voluntary
Public pension plans that are
publicly managed
Occupational/personal
pension plans
Voluntary personal
pension schemes
• Public Service Department
• Social Security Organisation
(Socso)
• Employees Provident Fund
Board
• Armed Forces Fund Board (LTAT)
• Private Retirement Schemes
(PRS)
• None
Voluntary
Non-financial arrangements/
informal support
• Ministry of Education
Malaysia
• Klinik 1Malaysia
6
Lembaga Kumpulan Wang Simpanan Pekerja
Employees Provident Fund Board
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Annual Report 2015
•
Facts at a Glance
2015
•
Vision of a
Comfortable
Retirement
•
Current Retirement
Scenario in Malaysia
The Guardian of
retirement
4
Corporate Overview
5
Awards
6
Five-Year Financial
Highlights
8
Corporate Diary 2015
28 Members of the
Investment Panel
43 EPF Deputy Chief
Executive Officers
44 Senior Management
Withdrawal by
Schemes
GIVING VALUE BACK
64 Strategy Division
Active Members’
Profile by Savings
Range and Gender
as at 31 December
2015
CHECK AND BALANCE
74 Statement
on Corporate
Governance
33 Newly Appointed
Board Members, Alternate Board
Members and
Investment Panel
80 Risk Management
33 Outgoing Board
Members, Alternate
Board Members and
Investment Panel
90 Board Audit
Committee Report
34 Board and
Investment Panel
Committees
35 Shariah Advisory
Committee
Members
2015-2017
2
42 Organisation
Structure
58 Operations Division
Integrity and
governance
Active Members’
Average Savings at
Age 54 by Gender/
Members’ Average
Savings at
Age 54
THE FINANCIALs
38 Chief Executive
Officer’s Statement
Dividend Rates
Leading the way
52 Investment Division
27 Alternate Members
of the Board Government
Representatives
Making the most of our future matters
to us all. At the Employees Provident
Fund (EPF), what matters most to us is
managing your retirement in an efficient
and reliable manner. With more than 14.5
million members and over 500,000 active
employers, we strive to ensure you have a
secure retirement through lifelong income,
healthcare and home financing. Our
ambitions are focused, we look to empower
you to make informed financial decisions
that are aligned to your lifestyles and values.
By doing this, we’re effectively empowering
your retirement.
Contribution Rates/
Active Members’
Profile by Age Group
and Gender as at
31 December 2015
10 Chairman’s
Statement
16 Members of the
Board
Cover
Rationale
86 Statement on Risk
Management and
Internal Control
93 Statement on
Internal Audit
95 Statement on
Investment Risk
Management
98 Group Corporate
Structure
100 Financial Overview
and Analysis
epf Properties in
Malaysia
103 Financial Statements
List of Top 30
Equity Holdings by
Percentage of Issued
Shares as at
31 December 2015
ADDITIonal
resources
240 Glossary
242 EPF Over the Years
(1951-2015)
244 68 Branch Networks
Across Malaysia