Wednesday, March 25, 2009

Keep a close eye on your EPF money

So, after months of waiting and speculation, including the tantalizing prospect of getting our dividend in cash, EPF (Employees’ Provident Fund) has finally declared a 4.5% dividend for 2008, to be credited into our accounts as usual. The small amount will disappoint many while others will suggest it is fair given the horrendous equity market performance last year. What is an appropriate benchmark for EPF can be the subject of a long piece at another time.

There are more pressing immediate issues. I was in Penang last week, with a contingent of fund managers and analysts there to see for themselves what the economic situation is like. For me, it was a good opportunity to catch up on goings on in the investment world, and the news on stewardship of my retirement money was extremely disconcerting:
1) EPF now has no Chief Investment Officer (CIO);
2) The RM10bn for Khazanah to deploy under the 2nd stimulus plan will come from EPF.

I am told Mr Johari Muid, CIO, has been redeployed to other duties within EPF. I have met Johari during my investment analyst days. I am sure his brusque, abrupt manner has made him many enemies, but I believe he is intelligent, competent and capable. The personality aspects are immaterial – what is important is I felt my retirement money was in good hands under Johari’s stewardship. Now, just month before his contract expires, he has been moved to other duties.

Why the rush? And why now when there is no immediate successor? Surely these turbulent times call for a smooth transition, if one is necessary in the first place. We contributors are owed an explanation.

Correlation is not causation is a principle drummed into me by my statistics teacher. But coinciding with Johari’s removal is widespread speculation that EPF will be lending RM10bn to Khazanah to fund investments under the 2nd stimulus package. This comes on top of EPF lending RM5bn to Valuecap to invest in stocks.

I’ve already blogged on how irrational it is for EPF to lend money to a competitor, Valuecap. Now we find EPF potentially lending money to another competitor with a chequered record, Khazanah.

Watch the news flow!

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