Liquid assets will cover withdrawals by members, says EPF

 

The EPF says it will look to its liquid assets to balance the impact of withdrawals.

PETALING JAYA: The Employees Provident Fund (EPF) said it expects the additional outflow from withdrawals by members affected by the Covid-19 pandemic to have a “minimal impact” on its long-term returns.

The country’s largest pension fund told Bloomberg that it had been expecting withdrawals since the outbreak early this year and had prepared for it by increasing its cash levels.

“In the case where the EPF has to rebalance its portfolio, it would look into its liquid assets to cater for the withdrawal.

“It will be done in an orderly manner without being disruptive to the market and its own long term investment strategy,” the financial news agency quoted them as saying.

EPF recently allowed contributors to make a one-off RM10,000 withdrawal from their EPF Account 1, although there were certain conditions that had to be met.

This included workers who have not contributed to EPF for at least two months and those who had suffered a minimum 30% reduction in their basic salary from March.

A second category of members whose total income has been reduced by at least 30% from March are also eligible but they have to show supporting documents to verify this.

But the ruling sparked concerns that any large withdrawals by members would hurt EPF’s returns and a selldown of its portfolio would weigh on the stock market.

However EPF said its ability to invest was not limited to contributions “but also determined by its investment income”.

“The impact of i-Sinar on EPF’s cashflow will largely be dependent on the take up, which will vary based on the individual needs,” it told Bloomberg. - FMT