PETALING JAYA: The Employees Provident Fund (EPF) said it expects the additional outflows from admissions by members affected by the Covid-19 pandemic to have “minimal impact” on long-term returns.
The country’s largest pension fund told Bloomberg that it had been expecting withdrawals since the outbreak at the beginning of this year and that it had prepared for that by raising cash levels.
“In the event that the EPF needed to rebalance its portfolio, it would examine its cash to provide for the withdrawal.
“It will be done in an orderly manner without disrupting the market and its own long-term investment strategy,” said the financial news agency.
EPF recently allowed contributors to make a one-time withdrawal of RM10,000 from their EPF account 1, although certain conditions had to be met.
This included employees who have not contributed to EPF for at least two months and those who had received a minimum of 30% off their base salary as of March.
A second category of members whose total income has been reduced by at least 30% from March onwards are also eligible, but they must provide documentary evidence to verify this.
But the ruling raised concerns that major member withdrawals would hurt EPF’s returns and that a sell-off of its portfolio would weigh on the stock market.
However, EPF said its ability to invest was not limited to contributions “but was also determined by its investment income.”
“The impact of i-Sinar on EPF’s cash flow will largely depend on the take-up, which will vary based on individual needs,” said Bloomberg.