NO to private pension funds - we need Government-Run Pension Funds or Government Guaranteed Pension Funds..

Private pension fund - this is scary, as it has been shown over and over how unreliable and untrustworthy private companies can be. Collect all our monies, and then suddenly go bust - and contributors will not have any remedy at all.

It is better if this pension fund is a government pension fund, just like EPF, with a government guarantee of 2.5% return per year. I think, maybe it should be at 5% return per year guarantee. ASN and ASB does so musch better - and thus it can be done. After all, it is a pension fund.

The much talked about private pension funds will kick off by the middle of next year.

Minister in the Prime Minister’s Department Tan Sri Nor Mohamed Yakcop, who announced this, said the new scheme would target the two million self-employed and those who were outside the current pension scheme.

He said the new pension funds could either be operated by new fund management firms to be licensed by the Securities Commission, or by existing firms.

The funds would be regulated by the Securities Commission.

“Several fund managers have already shown keen interest,” he told a press conference after delivering his keynote address at the Forum on Private Pension Industry Retirement Funds here yesterday.

Nor Mohamed said the scheme would target self-employed individuals who currently did not contribute to the Employees Provident Fund or those who wanted to contribute more than the EPF’s statutory requirements.

“We have to ensure it is well managed as it is a pension fund, a fund for individuals in their old-age,” he said.

He said the EPF had a government guarantee of 2.5% return.

“The private pension funds should be able to provide a ‘market return’ at any point of time,” Nor Mohamed said when asked on investment returns.

“The EPF has RM340bil in assets now. These private pension funds have huge potential,” he said, adding that there were currently 5.7 million active EPF members.

Nor Mohamed said the funds were part of the Government’s effort to reform the pension fund industry.

“This is crucial as Malaysia moves towards a developed and high income nation,” he said, adding that such funds would be a boost to the nation’s capital markets.

He said the SC had been tasked to prepare a report containing further details within the next six months.

“The Government at the same time will look at its own pension scheme and the Employees Provident Fund (EPF), and head a committee to coordinate all aspects of the pension reform,” he said.

In a survey by the EPF, it was found that around 90% of members have less than RM100,000 in their accounts and more than 70% would have exhausted their money within three years of withdrawing the lump sum upon retirement.

“This underlying trend reflects the sole dependence of retirees on their EPF savings as a safety net and as such, the inadequacy of sustainable levels of income after retirement,” he noted.

He said Malaysia had pension coverage via EPF, the Public Sector Pension Scheme and Lembaga Tabung Angkatan.

“However, there are gaps in the existing pension framework,” he said.

SC chairman Tan Sri Zarinah Anwar said the regulator would make capital preservation and investor protection top priorities when it came to the funds.

“We are gathering input from successful private pension funds models in other countries. We will then try and adopt the best practices to start off on the right footing,” she said.

Areca Capital Sdn Bhd chief executive officer Danny Wong said it “would take some time” to see the impact of the funds on the capital market.

“It all depends how individuals respond,” he told The Star. - Star, 24/7/2009, Private pension go-ahead

Finally, one good move to adress welfare of retirees/elderly in Malaysia

The government has long tried to give the wrong impression that it is looking into the welfare of the growing number of elderly - by talking about the pensioners...and improving on the pension scheme,etc - but alas that only will be assisting the public/government servants who are under the pension scheme when they retired.

Remember, that some years back, many public servants were encouraged to opt for the EPF/KWSP scheme - and many foolishly did so because their 'UMNO-led BN government' was telling them to do so...so they too did not fall under the pension scheme.

There have been much privatization - and many public servants lost their 'pensions' when privatisation happened...

If you are pensioner, you will receive pension payment (roughly 50% of salary, if I am not wrong) until you pass on (and then your spouse will receive that pension until he/she passes on) - while with the EPF/KWSP scheme, you get a lump sum payment when you retire, and nothing after that.

The problem that for most, this EPF/KWSP money is used up within a couple of years.

I know a man who when he retired, he had about RM70,000 in his EPF account. He was a bachelor and lived in a rented room, and in less than 7 years there was no more money left.

The Deputy Minister is right when he says '...that many EPF contributors used up all their savings within two years and were left without any source of income...'

Today, with the UMNO-led BN government's policy, persons are being encouraged to dig into that money meant for the old age ('simpanan hari tua anda') now - which translates into less money being available in their EPF/KWSP account when they retire - stop work.

Money in EPF/KWSP also today no more gives us that 8% interest - now it is about 5%.

Cost of living has definitely increased. Tolls, electricity rates, water rates, indah water, telecommunication rates, television, etc...

There is also a change in value systems. Now, persons are more concerned about the nuclear family (me, my spouse and my kids) and no more the extended family and other dependents...

And as such, it is a great concern for Malaysia whose elderly (i.e. 55 years and above) is increasing, and taking into consideration the average life span of men is about 72, and women 77. In 2008, there are about 1.3 million in Malaysia above 65 years of age [unfortunately the Statistic Department does not have information about how many are above 55 years of age..)

The Human Resources Ministry is looking into setting up a pension scheme for private sector employees so that their Employees Provident Fund (EPF) savings can last a lifetime.

Minister Datuk Dr S. Subramaniam said that through the scheme, the employees would receive a monthly pension instead of withdrawing all their savings upon retirement.

He said findings showed that many EPF contributors used up all their savings within two years and were left without any source of income.

“A pension will ensure that they receive a regular monthly income,” he told The Star.

The ministry was now drafting a working paper for the Finance Ministry. The scheme is under the purview of the Finance Ministry.

“We are still studying the matter and do not have a concrete mechanism for the scheme,” Dr Subramaniam said when asked how the scheme would work, if it would be a scheme by itself and if it would be made optional or mandatory.

He said the working paper would be ready in the next few months. The views of interested parties, such as employers and workers groups, were welcomed, he said.- Star, 16/1/2008, Ministry looking into ways to make EPF savings last a lifetime

Remember also as one advances in age, there is also more illness and greater healthcare/medicines, etc is needed.

As one advances in age, we also find that without an income - persons may no longer be abloe to pay for medical insurances, personal accident insurances, critical illness insurances - and also the fact that many of these insurances will no longer be available for the elderly - too risky.

Without insurance - many Malaysians certainly cannot afford the National Heart Institute (IJN) rate of charges - so maybe this may affect the Malaysian average life span....

Towards a caring government ...towards a caring Malaysian people...