EPF (4.5%), CPF (4%), LTAT (16%)

• Malaysia's EPF maintains a caring position

• When Datuk Seri Najib Tun Razak announced that contributions into EPF has been slashed to just 8% (optional) which will be effective for 2 years, I believe there were many who took up that option.

• The flow of money into EPF has shrinked and that means, investments by EPF has to now consider a new endowment point.

• Do I even need to iron out the substantial and clear fact that WE ARE IN AN ECONOMIC CRISIS?

• Yet, EPF is expected to declare a 4.5% dividend for 2008.

• A rate which can put EPF at a high position globally at this time when equity and trust funds are giving out insignificant returns on investments.

• For those who are in the banking sector, we all know that the bank fixed deposits are definitely not as much as EPF's returns.

• Also, we need not go far for comparisons.

• A rich country down South, Singapore, recently released a press statement on the 12th of March 2009.
  

CPF INTEREST RATE FOR SPECIAL, MEDISAVE AND RETIREMENT ACCOUNTS (SMRA) FROM 1 APRIL 2009 TO 30 JUNE 2009.

Since 1 January 2008, interest rate for savings in the Special, Medisave and Retirement Accounts (SMRA) has been pegged to the 12-month average yield of the 10-year Singapore Government Security (10YSGS) plus 1%. The average yield of the 10YSGS over one year, from 1 March 2008 to 28 February 2009, plus 1% worked out to be 3.69%.

To help CPF members adjust to the floating SMRA rate, the Government will maintain the 4% floor rate for two years, from 1 January 2008 to 31 December 2009, if the 10YSGS yield plus 1% is below 4%. After 31 December 2009, the 2.5% floor rate will apply for all CPF accounts.

Hence, the SMRA interest rate from 1 April 2009 to 30 June 2009 will be 4% (floor rate).

• Malaysia's EPF remain positive, careful and caring with a 4.5% dividend.

• Some quarters are unhappy though. They want more from EPF in an economy crisis.

• Even Malaysiakini's headline spell out - EPF dividend for 2008 a mere 4.5%?
  

• Some might say that EPF's investments are based on 2008. But rationally, will any equity fund dish out a 7-8% dividend in anticipation or when engaged in an economic crisis?

• If that is the case, it makes me think what the appropriate dividend rate for EPF should be if we are riding on a bull run. Perhaps 12%?
  

• I can only wonder while Economists, financiers and politicians have differing views almost individually if not collectively.

• Having said this, I am shocked to read that Lembaga Tabung Angkatan Tentera Malaysia is paying out a 7% dividend and a 9% special bonus for year 2008 which comes to a total of 16%.

• It is either they are doing really well, or they need a new funds manager who has more logic.