'EPF is becoming one giant Ponzi scheme'

YOURSAY 'Are they using contributors money to pay dividends? Otherwise where does the money come from?'

EPF loaned RM55bil without gov't guarantee backing

Tailek: The auditor-general should have named the 13 debtors to whom the Employees Provident Fund (EPF) has loaned billions of contributors' money.

Obviously they are cannot be named because they are probably GLCs (government-linked companies) or Umno-BN crony business groups. It makes you sick to the stomach that such corrupt actions that circumvent Finance Ministry procedures are still going on.

The finance minister should take responsibility for this and let someone of more ability and integrity takes over. The EPF is becoming one giant Ponzi scheme.

FellowMalaysian: This is preposterous - RM55.1 billion loans approved without any government guarantees? This sounds like the mother of all cronies.

Imagine what colossal financial implications this would have to our country's economy even if just 10 percent of these companies were to default on their payments? That would mean RM5.5 billion.

This surely did not comply with the department's operation manuals for investments as no financial institutions, whether government or otherwise, in their right sense would lend such enormous sums without water-tight guarantees.

Can the concerned people please highlight and bring forth this issue immediately before it turned out into another national fiasco?

Ashoka PJ: An EPF contributor going bankrupt due to credit card default or housing loan default as a result of unemployment or shrinking value of the ringgit, cannot withdraw his EPF contribution to save himself and feed his family.

But EPF can give cheap loans to GLCs and crony companies to save them from bankruptcy and make big profits from our hard-earned contribution.

EPF, where are your priorities? I feel you should allow withdrawal to clear contributors names from being declared bankrupt or blacklisted.

Quigonbond: Every single EPF contributor, be it business or employee, should pause and read this article, and consider the implications, if you haven't already. Your money has the potential of going down the drain.

They may still pay your paltry dividends. But future generations of contributors will bear the burden of diminishing returns.

It's not like this issue of financial control, or investment decision-making process, have never been called into question. But they have always fallen on deaf ears, because EPF is daddy's account for BN.

Ferdtan: Not only the RM55 billion loans, but also the quoted and unquoted shares EPF invested are of concern.

Are these shares in their book reflected the correct current market value? If not, many millions or billions, following standard accounting practice, should be written off as losses.

Often you find that at year-end, most Bursa Malaysia shares will shoot up artificially, thus saving EPF from writing off any below-par shares. We are not sure whether EPF have a hand in shoring up such share prices, but they certainly are big enough to have the clout to do so - if they so wish.

I'm not accusing the auditor-general of not doing a good work, we really wish EPF can be audited by an international audit firm. Then only can we honestly believe EPF is solvent as painted by them.

SMC77: The returns on loans and bonds are generally lower than equities.

We should question about why:

1) the loan portfolio is concentrated for 15 borrowers

2) whether EPF prices these loans correctly

3) EPF invests in loans instead of asking the borrowers to issue bonds, which have better liquidity than loans.

Jimmy Ng: Is that the reason why the EPF is now getting employers to increase their mandatory contributions from 12% to 13%?

Is it because they dug themselves into a deep hole and now are trying to get themselves out through the additional 1%?

Rick Teo: Most people don't realised that EPF is already a bankrupt institution. If it were to wind up today, it will not be able to pay back what it is due to its contributors.

They have lost so much money on its investment that they have to keep on getting the employers to increase their contributions so that they will have enough money to pay those contributions that mature.

The people helming EPF are nothing but Umno cronies and is only interested on how they can make a quick buck from the EPF funds.

Has EPF ever open up its books so that the public can scrutinise their financial reports to see if they are done in a transparent manner.

It is interesting to find out how they can pay dividends of 5% when their return of the RM95 billion was only 2.3%? Are they using contributors money to pay dividends? Otherwise where does the money come from?

Joker: Earning RM2.52 billion in interest on loans of RM95.79 billion (as of the end of 2010) implies an interest income of 2.6%.

This is lower than FD (fixed deposit) interest rate, which is less risky. If EPF is ready to give out loans at such low rates, the government can finance its 1Malaysia home loan from EPF directly.

A loan of RM96 billion is sufficient to finance 240,000 home loans of RM400,000 each.

Mohd: Being an EPF contributor, I am not surprised. The EPF has been giving an average 5.5% return over the past 10 years.

Now we know with facts why they are giving only such low rate of return. Take in the unofficial inflation rate of 4%, this make our real return at only 1.5%.

Ksn: No wonder the EPF was the first organisation that welcomed the extension of retirement age to 60 so that contributors cannot withdraw their savings for another five years.

They are gambling with the people's life savings for their retirement and old age. I thought EPF has a BOD (board of directors) and that the MOF (Ministry of Finance) is represented there.

Why has the entire BOD not sacked yet? MOF, get off your backside and act. What are the trade unions doing about it now that the story of the doggy loans are in the public domain?

Manjit Bhatia: Is anybody surprised by this? This is not money that belongs to the state. It's the people's pension fund. But it is being used and abused for chiefly political and corruption purposes.

Umno-BN cronies and their patron political elite are feathering their own nests to the detriment of the national interest and owners of that fund.

But I'll wager most Malaysians will simply whine and shrug their shoulders and walk away saying, "But what can I do? That's the government; I'm just one person." The usual story.

Malaysians are being robbed blind by Umno-BN and their cronies and their children. And you're going to let them get away with blue murder. Right?

Anonymous: I knew this day would come. The sources for funding is shrinking. Petronas and EPF are the last ones where the thieves and cronies can make quick bucks without paying the price. - Malaysiakini