Malaysian pension fund EPF to hit $250b AUM in 2-5 years, says incoming CEO

Alizakri Alias
Alizakri Alias

The largest pension fund in Malaysia, the Employees Provident Fund (EPF), is set to grow its current assets under management from RM814.38 billion ($200 billion) to RM1 trillion ($250 billion) in the next two to five years, said its deputy CEO of strategy, Alizakri Alias.

He, however, declined to elaborate on the fund’s investment strategies. He is set to step in as CEO on August 20, succeeding current CEO Shahril Ridza Ridzuan who has been appointed as the managing director of Malaysia’s sovereign wealth fund Khazanah Nasional Bhd.

Speaking to reporters on the sidelines of the International Social Security Conference 2018 organised by EPF along with Nomura and Citi Malaysia, Alizakri said the pension fund had not received any information about the reported Socso-EPF merger. To recap, local media had reported that the pension fund is considering a merger with Social Security Organisation (Socso) to streamline its social welfare efforts.

The incoming CEO also emphasized that the pension fund is free from any interference as its objective is to generate social benefits and financial returns for its 13.7 million members.

He pointed out that it was crucial for pension funds around the world, including EPF, to continuously reinvent themselves to maintain their relevance, especially to the younger population.

EPF on Thursday signed a memorandum of understanding with ride-hailing major Grab Malaysia to expand its social agenda into the gig economy through a voluntary contribution scheme, dubbed Caruman Sukarela Insentif Persaraan (i-Saraan) which will kick off on August 16. In return, Grab will also be contributing 5 per cent on the amount contributed by selected drivers subject to a maximum of RM80 ($19.65) per year, in addition to the government incentives.

i-Saraan was previously known as the 1Malaysia Retirement Savings Scheme (SP1M). The pension fund also had a similar pact last October with Uber before the ride-hailing startup exit Southeast Asia. Alizakri said, the MoU is part of the fund’s effort to prove its relevance in the digital economy.

“We reached out to gig economy workers to help them understand how they could contribute to the social security aspect of their workers. We managed to convince them – in a fairly short amount of time – that social protection is going to be the next biggest benefit to their workers at large who might not be covered under the EPF. And, due to this, these workers could opt to join our voluntary EPF contribution scheme. Under this scheme, they could contribute up to RM60,000 ($14,740) a year. The reason we cap it at that amount is that we want to serve the people at large,” he explained.

He went to add, “We have to make sure we are relevant to the gig economy and establish a branding that is sexy enough for the younger population. People’s engagement with EPF should be at various stages of their lives, not just during retirement. We need to meet the lifestyle needs of our members, when they step into their working lives.”

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