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PAS : KE ARAH PEMERINTAHAN ISLAM YANG ADIL
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Aug 18, 2000
Don't opt for EPF annuity scheme, says MTUC
Susan Loone
5.50pm, FRI: Malaysian Trade Congress Union (MTUC) has urged its 540,000
members in the country not to opt for the Employees Provident Fund (EPF)
Annuity Scheme, said its secretary-general G Rajasekaran.
"Contributors who opt for the annuity scheme through insurance companies
would generally suffer a substantial loss," he said in a press conference
today at the Metal Industry Employees Union office in Petaling Jaya.
The advice came about after the Consumers Association of Penang (CAP)
released its report on a study it conducted about the scheme.
Among other things, the study highlighted the scheme's low rate of return
(the lowest being 3.2 percent) compared with EPF's annual dividends (which
currently stands at 6.7 percent).
Death and annuity
Referring to the death benefits offered under the scheme, Rajasekaran
pointed out that according to the CAP report, if a 20-year-old family member
(male) dies 10 years after he joins the scheme, his family will get RM1,200
per annum for the next 10 years or a total of RM12,000.
"This is not a lot of money since he would have paid out RM6,150 in premiums
after 10 years.
"If he dies at age 55, his family will also receive RM12,000 for the next 10
years.
"But if he had not joined the scheme at age 20, his RM6,150 would have
increased to RM59,513 (via EPF annual dividends) and all that would have
gone to his family," he added.
Campaign by insurance companies
Several insurance companies have circulated pamphlets and are carrying out
extensive campaigns among factory workers to get them to sign up.
Last week, MAA Holdings Bhd said that it expected to rake in RM9 billion
from its new EPF pension business over the next three years, with the
annuity scheme envisaged to contribute 80 percent to its business.
The huge profit margin from this scheme is reflected by the vigour and
enthusiasm shown by insurance companies, said Rajasekaran.
"If the profits are so big, why can't EPF manage the scheme on its own, why
does it have to contract it out to an insurance company?" he said.
MTUC felt that if the scheme was beneficial, then EPF should directly
introduce and manage the scheme so that all profits derived will remain with
EPF, who can then raise the annual dividends doled out to members.
Rajasekaran highlighted the fact that if other provident funds, such as
Tabung Haji, were able to give out eight percent dividends, there was no
reason why EPF could not do the same.
The decision to introduce the scheme was not discussed at board level in the
EPF, according to Rajasekaran, who disclosed that MTUC has five
representatives on the board.
Rajasekaran also claimed that EPF had diverted from its main objective to
provide adequate social security to its nine million contributors.
EPF's RM260 million unpostable
Referring to EPF's disclosure that its funds amounting to RM260 million were
"unpostable" due to lack of information pertaining to contributors,
Rajasekaran commented that EPF is not giving this matter due attention as
some of the accounts had been affected for about 30 years.
"EPF is not mindful of the serious implication of this problem," he said,
adding that the situation is unacceptable because EPF is a big organisation
with advanced technology and a huge staff.
"It is only natural that people will perceive the matter in a bad light and
interpret the whole situation as a deliberate attempt to use contributors'
money to rescue ailing companies," he added.
Rajasekaran said that MTUC will submit a memorandum to the Finance Ministry
within a week, urging it to investigate the matter immediately.
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