PANDU CERMAT, SAYANGKAN NYAWA

PANDU CERMAT, SAYANGKAN NYAWA
INGAT ORANG YANG TERSAYANG

INGAT ORANG YANG TERSAYANG

INGAT ORANG YANG TERSAYANG
PASTIKAN ANDA DAN SEMUA PENUMPANG MENGGUNAKAN TALI PINGGANG KELEDAR

20090724

Malaysia to establish private pension funds by middle of 2010

Malaysia is set to have private pension funds by the middle of 2010, focused on those who remain outside any formal pension system.

Minister in the Prime Minister’s Department Tan Sri Nor Mohamed Yakcop said this was part of the whole pension fund reform in the country and crucial for building the new high income based economic model, he said.

“Several fund managers have shown keen interest in establishing private pension funds. Therefore, there could be a few, rather than just one,” he explained.

He said within the next six months, the Securities Commission (SC) would submit a report to the government on the private pension fund.

“The government will at the same time, look at its own pension fund as well as the EPF and head a steering committee to coordinate all aspects of the pension reform,” said Nor Mohamed.

At present, a relatively large proportion of the economically active population in the formal sector has pension coverage through the Employees Provident Fund (EPF), the public sector pension scheme and Lembaga Tabung Angkatan Tentera (LTAT).

“As at the end of 2008, there were over two million self-employed Malaysians remaining outside any formal pension system.

“In addition, there are people who are non-wage earners and do not have any specific old age benefit provision,” he said in his keynote address at a forum on the private pension industry and retirement funds here yesterday.

“Hence, developing the private pension fund industry would contribute towards the establishment of a more competitive market economy, that is able to sustain itself over the longer term,” Nor Mohamed added.

He highlighted that even for those within the pension framework, equally important was the issue of sustainability of financial security during retirement.

According to Nor Mohamed, there are currently 5.7 million active members contributing to the EPF.

“A survey by the EPF indicated that about 90 per cent of contributors have less than RM100,000 in their accounts. Over 70 per cent would have exhausted their total contributions within three years of withdrawing a lump sum on retirement at the age of 55.

“This means by age 58, an average retiree would have depleted all his retirement savings with EPF. This underlying trend reflects the sole dependence of retirees on their EPF savings as a safety net, and as such, the inadequacy of sustainable levels of income after retirement.

“Therefore, the need for a private pension fund is important and at the same time, it has to be of a good quality and trustworthy.

“We have to ensure it is well managed as it is a pension fund. The EPF has a government guarantee of 2.5 per cent return. The private pension fund should be able to provide a market return at any point of time,” he said.

Elaborating further, the SC chairman Tan Sri Zarinah Anwar said the regulatory framework for the pension funds had to be ironed out as it catered for a long term retirement plan.

“It has to have some features that will cater for the long term,” she added.

The SC, she stated, was gathering input from various jurisdictions that had already worked with successful private pension fund models in other countries.

“We will then try and adopt the best practices to start off on the right footing. The most important thing is investor protection and at the same time, be attractive for investors to invest,” she said.

— Bernama

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