THE Employees Provident Fund (EPF) has been a source of pride for its members in recent years.
By delivering good, or some might say, solid returns, the perception of the public towards the EPF has improved.
In the past, it was commonplace for disparaging comments about the fund.
Doubt was cast over the security of savings, with seeds of doubt planted in members’ minds.
They were told that their money was safer and could grow better outside of the EPF.
We now know that is not true.
However, the EPF is not without its own problems.
The main issue “plaguing” the EPF today is simply the gargantuan size of its fund.
Its own CEO believes the size of EPF’s assets under management, now at RM1.25 trillion, could grow to RM2 trillion by 2030 and RM3 trillion by 2035.
That will mean that the EPF will grow much faster than it has in recent times.
But there is a far more startling statistic.
It will also mean that by the year 2030 – and highly likely by 2035 – the size of the EPF will be larger than the entire Malaysian economy!
With a pool of money that large, it will become incrementally more difficult to generate higher dividends.
That will create a different kind of risk, which we may unfortunately be seeing right now.
In recent years, the government has tapped the EPF for its social programmes.
As the size of funds managed by the EPF grows, so too does the risk of it being used to finance a broader range of government programmes.
The larger the fund, the greater the temptation to tap into it.
Recently, the EPF was involved in Gear-Up, a programme designed to boost investment spending in the country in new growth areas.
The government-linked investment companies (GLICs) involved in Gear-Up are Khazanah, EPF, Retirement Fund (Inc), Permodalan Nasional Bhd, Lembaga Tabung Haji and the Armed Forces Fund Board.
They are to invest RM120bil over the next five years in high growth and high value industries in the country.
Much of that investment is meant to drive economic activity and lessen the government’s fiscal burden.
The EPF is said to be providing funds for healthcare under the Gear-Up scheme that is reported to be commercially viable through collaboration with the government, including the construction of a private wing in public hospitals.
Last March, however, news broke of how Bank Negara, the Health Ministry and the EPF will develop basic health insurance and takaful to handle the issue of skyrocketing healthcare costs.
Yet, as highlighted in my May 21, 2025 column, “Patients trapped in between,” structural cost pressures—largely driven by insurance providers—remain the primary concern.
The EPF’s current involvement may be well-intentioned, but its impact on cost containment appears limited.
There are scant details on how that basic health insurance programme will work and there should be more details provided to assuage concerns that members’ money will be used to fund loss-making welfare programmes.
This concern could be valid.
The basic insurance programme does share – by the looks of it – a similar skin as the Malaysia Motor Insurance Pool (MMIP).
The MMIP was designed to be a social safety net for people who could not afford higher priced private insurance.
It is said to be loss making and it is managed by Bank Negara and subsidised by insurance companies.
The crux here is whether the EPF should be tapped to provide funding for the basic medical insurance scheme and to what extent will its role be in such a programme?
The risk is that the EPF, with its vastly growing pool of funds, will be a lucrative source of money to roll out welfare programmes in the country.
That should not be – and was never meant to be – its purpose.
The main purpose of the EPF is to generate returns higher than 2.5 per cent for its members.
There is also one big misconception that the EPF is a government-linked company or GLIC.
It is not.
The funds in the EPF are money from its members who are citizens of the country.
It will soon also include money from foreign workers, akin to what employed Malaysians contribute to the fund on a monthly basis.
The money in the fund is not the government’s money.
That opinion was conveyed to me by its former CEO over dinner last Monday and there is an increasing risk that the EPF will be used to fund welfare programmes by the government when that is not its main purpose.
The EPF can fund the government by buying government bonds and programmes that can generate sufficient returns in the future.
There should not be open-ended funding of potential loss-making welfare programmes.
Any withdrawal of money from the EPF should also be for the benefit of its members.
In the past, there were schemes to equip members with computers or laptops but that scheme has been discontinued.
Today, members are allowed to withdraw money to part finance the purchase of a house, to further their studies or to invest in unit trust schemes.
All such withdrawals are for the welfare of individual members.
If the EPF is called upon to fund more and more government programmes, it could lead to a loss of faith in the fund — something it has spent a great deal of effort trying to combat in recent years.
All of that goodwill may be lost. And that will be a crying shame.
The views expressed here are those of the columnist and do not necessarily represent the views of Sarawak Tribune. The writer can be reached at med.akilis@gmail.com
