EPF says 80% of workers have savings below poverty line as they turn 55

BY SHERIDAN MAHAVERA
Published: 13 March 2015 8:23 AM

Malaysian workers during morning rush hour on their way to work. EFP says most Malaysians have not enough savings in their pensions fund as they reach 55, forcing many people to work into their 70s, reflecting latest global trends. – The Malaysian Insider file pic, March 13, 2015.
Malaysian workers during morning rush hour on their way to work. EFP says most Malaysians have not enough savings in their pensions fund as they reach 55, forcing many people to work into their 70s, reflecting latest global trends. – The Malaysian Insider file pic, March 13, 2015.
Nearly 80% of workers who will turn 55 this year will not have enough savings in their Employees Provident Fund (EPF) to live above the poverty line, according to figures released by the fund’s chief executive officer.

Datuk Shahril Ridza Ridzuan said for the next 20 years, the workers would not have enough in total EPF savings to enable them to live on RM800 a month, which is close to Malaysia’s average poverty line income of RM830.

This is because most of them had low wages when they started contributing to the fund in 1980s, and continued earning relatively low salaries till they turned 55, said Shahril, who did not provide a number for this batch of retirees.

The revelation shines the spotlight on the problem of low incomes among a majority of Malaysian workers, even as Putrajaya said it aims to make Malaysia a high income nation in five years’ time.
According to Shahril, more than 75% of its 14 million EPF contributors earn less than RM2,000 a month. About 15% earn between RM2,000 and RM5,000 a month, while those earning more than RM5,000 are in the top 10%.

The EPF has set RM196,800 as a savings threshold that would allow a contributor to spend at least RM800 a month for the next 20 years.

The threshold is revised every three years to take into account inflation.

Only about 20% of its contributors who turn 55 this year are expected to have RM196,800 in total savings. That percentage is likely to stay about the same in the coming years, said Shahril.

“Historically, we have a low wage environment, so that percentage has inched up only a little.

“This is why we tell contributors not to take out their savings till they are 60, when they really retire.

“That extra five years can earn them an extra 40% through compound interest,” Shahril (pic, right) said when met after a talk organised by the Chevening Alumni Association in Kuala Lumpur last night.

These figures, he said, reflect the new reality of working life in Malaysia, as people will have to work beyond 55 in order to save enough to live out the rest of their lives.

“This is the trend in developed countries and we are getting there. The reality is that you cannot retire and enjoy yourself at 55 any longer.”

That age was set in the 1950s and has not been changed to take into account longer life expectancies, he said, adding that these days, people expect to live through their 70s.

This trend is compounded by the fact that Malaysia is a rapidly ageing nation. In 2030, 17% of the population will be aged above 65, he said. In 2040, people aged 65 will outnumber younger individuals.

“So we need policies to deal with this, such as financial literacy training so that young people are aware of the need to save for retirement and how to integrate old workers into the market.

“These are issues that advanced economies have to deal with and we are getting there,” said Shahril. - March 13, 2015.

- The article was first published on http://www.themalaysianinsider.com/malaysia/article/epf-says-80-of-workers-have-savings-below-poverty-line-as-they-turn-55#sthash.rwsMYIjt.dpuf

Bank Negara Malaysia will not review repayment period

Bank Negara Malaysia will not review repayment period

By LIZ LEE
lizlee@thestar.com.my

KUALA LUMPUR: Bank Negara Malaysia will not review its 10-year repayment period for personal loans as suggested by certain quarters.

Governor Tan Sri Dr Zeti Akhtar Aziz was responding to appeals by Congress of Unions of Employees in the Public and Civil Services (Cuepacs) and the National Cooperative Organisation of Malaysia’s (Angkasa) to consider reviewing Bank Negara’s 10-year repayment period.

“In the world, 10 years for a personal loan (to be repaid) is the highest. It is usually about six years in other countries,” Zeti said on sidelines of the 5th Annual Global Policy Forum by the Alliance for Financial Inclusion (AFI).

Prime Minister Datuk Seri Najib Tun Razak graced the closing ceremony of the forum.

“When a person borrows to either pay for a television or a wedding, that is squandered within a few days,” she said, “(If the repayment period is longer) he or she will then have the misery of owning that loan for 15, 20 or 25 years for what they spent in a few days.”

Zeti pointed out that personal loans are different from housing loans, where applicants eventually own an asset after repaying the loan.

Both Cuepacs and Angkasa opined that the repayment cap should be extended to 15 years.

On higher inflation as a result from higher fuel costs, Zeti said there was no such scenario currently.

“We do not see that happening because the global economy is still having a very modest growth and certainly from the demand side, it is not going to precipitate higher prices,” she said, adding that any Government that tried to contain price increases through subsidies would experience a financial burden that is not sustainable.
“However, if there is a disruption in supply due to events that is beyond anyone’s control, then of course it could cause prices to go up throughout the world,” she said.

The forum ended with AFI declaring the Sasana Accord to help people in developing countries to have some form of financial services.

New rules won't hurt consumer financing segment

The article was first published on Business Times.

'New rules won't hurt consumer financing segment'

Muhammed Ahmad Hamdan
2013/07/10

BANK Islam Malaysia Bhd does not see the new regulation on household debts introduced by Bank Negara Malaysia recently as having a negative impact on its consumer financing segment.

Business development director Khairul Kamarudin said Bank Islam is, in fact, optimistic of achieving around a 20 per cent growth in its consumer financing segment this year.

"We welcome the new regulation by Bank Negara. We don't see it affecting our consumer financing segment as we have been practising similar guidelines since two years ago," Khairul said after launching Bank Islam's new Visa platinum credit card here yesterday.

Bank Negara last Friday announced that commercial banks must now set 10 years as maximum tenure for personal loan financing and 35 years for property loans.

"Ninety five per cent of our property loan borrowers has tenures of below 35 years.

"Our personal loan segment only offers a maximum tenure of 15 years, compared to other banks that offer personal loan tenures of more than 20 years," Khairul said.

Housing loan segment accounts for 50 per cent of Bank Islam's consumer financing portfolio, while personal loan is 30 per cent.

"We believe that Bank Islam has strong product distribution channels which will support the growth of our consumer financing segment," he added.

The new rules set by BNM were to curb excessive household debts and to reinforce responsible lending practices by key credit providers.

This is in light of the country's increasing household debts - averaging at an annual rate of 12 per cent over the last five years.

Khairul said Bank Islam expects to secure between 25,000 and 30,000 new subscribers for its new Visa platinum credit card by year-end.

"The target is relatively low as it is based on the industry's performance. Nevertheless, we will run various campaigns and initiatives to attract new subscribers for the Visa platinum credit card, including those who have already subscribed from other banks."

Currently, Bank Islam has a total of 138,000 active credit card members, including 2,000 Mastercard platinum credit card holders.

Its consumer card segment, which comprises 1.6 million cards, constitutes about five per cent of the bank's total consumer financing portfolio.

Ranhill Energy IPO

Another interesting IPO is coming to town. Will post more update such as whether or not it is a shariah-compliant IPO, and the analysts think of its indicative offer price of RM1.85.

Ranhill Energy seeks to raise RM753m from IPO

By Lim Cian Yai
bt@mediaprima.com.my
2013/07/05

Ranhill is due to make its debut on Bursa Malaysia's Main Market on July 31.

KUALA LUMPUR: Energy and utilities firm Ranhill Energy and Resources Bhd is seeking to raise up to RM752.95 million from its initial public offering (IPO).

Ranhill is due to make its debut on Bursa Malaysia's Main Market on July 31.

The IPO entails an offering of 407 million shares, with an indicative offer price of RM1.85 a piece. Of the total, 77 million shares will be available under an offer for sale by a major shareholder, therefore, raising RM142.45 million.

The proceeds will accrue entirely to the selling shareholder, Cheval Infrastructure Fund L.P. Upon listing, Cheval's stake in Ranhill will shrink to 15.8 per cent from 36.2 per cent at present.

The remaining 330 million new shares will be offered to the Malaysian public and institutional investors, raising RM610.5 million to the company.

"We hope to revitalise our capital structure through this listing exercise. We will use some funds to expand to China, which offers us a higher headroom, and also gear up a bit for more investment overseas," said Ranhill chief executive officer Tan Sri Hamdan Mohamad at the launch of its listing prospectus yesterday.

Of the RM610.5 million from proceeds, 60 per cent will be used for debt repayment and 33.6 per cent for business acquisition and expansion to increase Ranhill's market presence.

The company has identified four cornerstone investors that have agreed to buy 118.3 million shares.

They are Lembaga Tabung Haji, Eastspring Investments Bhd, Hwang Investment Bhd and Corston Smith Asset Management.

The book-building exercise started yesterday, with a price range dedicated to institutions being between RM1.70 and RM1.85.

"We received a strong response from investors and the shares are already oversubscribed," Hamdan said.

Ranhill hopes to boost water treatment capacity in China to 1,000 million litres per day (MLD) in the next five years.

It operates five water and waste-water treatment plants there, with a combined capacity of 270 MLD.

"If we hit 1,000 MLD, this will bring us RM500 million in revenue a year and a profit of around RM150 million," he said.

Last year, its business in China brought in RM150 million in revenue to the group.

Hamdan is considered a prodigy in the local corporate world. Along with Cheval, he privatised Ranhill Bhd in 2011 at 90 sen per share.

Its utilities arm, Ranhill Utilities Bhd, was also listed before being taken private by in 2008 at RM3.50 a share.

SingaPura & Malaysia punyai hutang isirumah tertinggi di rantau ini

Singapore, Malaysia household debts among highest in region

JULY 03, 2013

Singapore households are among the most indebted in Asia relative to what they earn, according to a Standard Chartered report this week, reported the Straits Times.

Households had borrowings worth 151 per cent of their annual income last year, second in the region only to Malaysia, with debt at 182 per cent of income.

This is mainly because consumers here take on large dollops of property debt, amounting to 111 per cent of household income - the highest level in the region, Stanchart said.

However, Stanchart warned that as rates rise, debt servicing may become more difficult for home owners who are over-leveraged, although current debt burdens are still manageable.Thanks to low interest rates, the repayments that Singapore households make on loans are also among the lowest in the region as a share of income.

Indeed, Stanchart's data shows that the overall debt service ratio for Singapore households has been rising since 2008. But they remain moderate, with total debt repayments coming up to only 13 per cent of total household incomes, the bank said.

This is lower than in Malaysia, South Korea and Australia, although higher than in the Philippines, Japan, Indonesia, India, China and Taiwan, which have debt service ratios between 2 and 7 per cent, it added. - July 3, 2013.

What is Koperasi Loan?

This article was first published on FreeMalaysiaToday website.

Similar to personal loan/financing offered by commercial banks, Islamic banks or DFIs (namely Bank Rakyat, Bank Simpanan Nasional and Agrobank), the interest/profit rate of this so-called credit cooperative loan is based on FLAT RATE!

Apa maksudnya? Kadar keuntungan/bunga tahunan dikira berdasarkan kepada jumlah pinjaman/pembiayaan, bukan seperti pinjaman/pembiayaan perumahan yang berasaskan "monthly rest".

So, extra careful whenever you think of applying for one :)

Apa-apa pun, adalah lebih baik mendapatkan pinjaman/pembiayaan peribadi daripada institusi kewangan dan koperasi daripada berhutang dengan ahlong.


Koperasi Loan?

June 26, 2013

It is a personal loan for employees of the government, statutory bodies, selected government-linked companies and municipal councils.

Are you an employee working in a government department, a statutory body, a government-linked company or a municipal council?  If you are, you could be one of the lucky Malaysians who qualify for Koperasi Loan – an easy-approval, low-interest loan with an ultra-convenient loan-repayment mechanism.

What is a Koperasi Loan?
A Koperasi Loan, or Credit Cooperative Loan, is a type of loan that is reserved specifically for workforce of government departments, statutory bodies, selected GLCs and municipal councils of Malaysia.

The amount that can be borrowed from a typical Koperasi Loan starts from as low as RM1,000 all the way up to RM250,000 (and sometimes even more).  Loan periods range from one year to 25 years.

As a financial product, a Koperasi Loan resembles a personal bank loan in almost every way.  It involves the lending of a sum of money from an institution to a borrower, at terms which are agreed upon by both parties.  And just like any personal loan, a Koperasi Loan can be taken for any purpose: from settling a debt, starting a business, getting married, buying a home or a car, financing your children’s education to taking a holiday, just to name a few.

Ultimately, the greatest difference between a Koperasi Loan and a conventional bank loan lies in the fact that the terms of a Koperasi Loan are usually much more flexible and “borrower-friendly” for those who are eligible to apply.

Key differences
Interest rate: Generally speaking, the interest rate of a Koperasi Loans is almost certainly much, much lower than that of a conventional bank loan.  As at June 2013, the lowest prevailing interest rate for a Koperasi Loan is 3.99%, compared to 7.6% for a consumer bank.

More flexible criteria:  Koperasi Loans are, on the whole, more lenient in the approval process compared to conventional bank loans.  In fact, Koperasi Loans can even be approved for borrowers with bankruptcy status, as well as those who could not get loans from banks due to less-than-desirable track records in the Central Credit Reference Information System (CCRIS) and the Credit Tip-Off System (CTOS).

Repayment method: Repayment for a conventional bank loan is done at a bank branch, via an ATM or through some form of direct-debit arrangement from a bank account.  Repayment for a Koperasi Loan is much simpler – it is conducted via direct deduction from one’s salary.

Loan payout: An important thing to take note about Koperasi Loan is that it does not disburse 100% of the loan amount to the borrower.  Usually, a percentage of the loan amount is retained, which can be interpreted as “one-time charge” incurred by the borrower.  The percentage retained can be up to 10% of the loan amount, or more.

Where do I get a Koperasi Loan?
There are many different types of Koperasi Loans all managed by different cooperative entities.  To apply for one, you could either approach such entities or go through an authorized agent.  An easier alternative is to use iMoney’s Koperasi Loan comparison table, where you can compare the rates and apply for one online at no charge.

This article is brought to you by iMoney, a price comparison website dedicated to helping Malaysians make the best use of their money. Check out their loan comparison tool here to compare interest rates across all Malaysian banks.

AirAsia X IPO

Anybody out there is applying for this IPO? Is the RM1.45 price tag fair?

It's a Shariah-compliant IPO, unlike the ASTRO IPO last year. No cornerstone investors! If I'm not mistaken, they are offering the largest percentage for retail investors i.e. 10.6%

And AirAsia X is giving some carrots for retail investors in the form of free AirAsia tickets, but you need to subscribe at least 10,000 shares (100 lots) to get one free ticket or 100,000 shares (1,000 lots) for 3 free tickets.

Some analysts said it's for medium to long term investment and do not expect for dividend payout for the three years. Hmmm...

To buy or not to buy?

KWSP Declares 2012 Dividend of 6.15%

Alhamdulillah, another institution has just announced a record dividend payout. And this time is the Employees' Provident Fund, which had declared an increase of 15 basis point from last year's 6% dividend rate.

Syukur ke hadrat Allah di atas nikmat yang tak putus-putus.

Dan tahniah kepada warga KWSP yang telah melaksanakan tanggungjawab yang baik dalam mengurus wang simpanan pekerja di Malaysia.

Semoga Allah memberkati usaha dan pelaburan ini dan moga warga KWSP agar terus berkhidmat dengan tekun dan jujur. Jangan kecewakan harapan rakyat jelata.

Skim Persaraan Swasta: Apakah bendanya itu?

PRS (Private Retirement Scheme) adalah satu inisiatif tambahan kepada caruman Kumpulan Wang Simpanan Pekerja. Tiada paksaan untuk mencarum tetapi caruman sehingga RM3,000 adalah layak untuk menikmati pelepasan cukai.

Setakat ini, sebanyak 8 syarikat insurans/kewangan telah diluluskan untuk menawarkan dana-dana persaraan, di mana 3 syarikat telah pun melancarkan produk mereka.

Modus operandinya juga lebih kurang KWSP, di mana 70% caruman masuk ke dalam Akaun 1 dan tidak boleh dikeluarkan sehingga mencapai usia persaraan. 30% caruman yang selebihnya akan masuk ke dalam Akaun 2 dan layak dikeluarkan sekali setahun. Akan tetapi, setiap pengeluaran adalah tertakluk kepada 8% potongan cukai kepada kerajaan.

Untuk maklumat lanjut tentang Skim Persaraan Swasta sila muat turun dokumen ini dari Suruhanjaya Sekuiriti.

Peringatan buat semua, sebarang caruman adalah tidak dijamin pelaburannya mahupun pulangan kepada pelaburan. Tidak seperti KWSP yang dijamin pulangan tidak kurang daripada 2.5% setahun.

****************************************************

Slow start seen for private retirement funds

By DALJIT DHESI 

daljit@thestar.com.my

PETALING JAYA: Despite competition heating up among private retirement funds, it is expected to take off at a slow pace as more education and promotion are needed to boost the take-up rate of these funds, according to fund managers.

To date three fund houses CIMB-Principal Asset Management Bhd, Manulife Asset Management Services Bhd and Hwang Investment Management Bhd have launched a total of 17 private retirement funds under the private retirement scheme (PRS). Eight fund houses are granted licences in April by the Securities Commission as PRS providers.

Areca Capital CEO Danny Wong told StarBiz he expected a slow start for these funds as they were voluntary, flexible and discretionary retirement savings or the third pillar under the world bank's 2005 Five Pillar Pension Model.

"Many tax payers are also EPF contributors. As such I expect a very small number from this group of working adults to consider PRS given that the EPF's return is quite reasonable historically, whereas PRS is not guaranteed and does not have any track record. There are non-EPF members who will consider this scheme but more time and publicity are needed to promote it,'' he added.

Based on unofficial estimates, Wong said there were about six million registered individual tax payers of which less than two million pay taxes. "Let's say the PRS manage to attracts 10% of these actual tax payers i.e. 200,000 potential PRS investors, and each of them on average contributes RM3,000 to benefit from the tax relief, hence the potential market size is RM600mil," he said.

Hwang Investment Management Bhd (HwangIM) chief product officer Steve Lim said it was looking at a three-year horizon for the contribution momentum to pick up and for the public to warm up to the idea of contributing to a privately-managed and voluntary retirement scheme.

This was an entirely new scheme that was less than a year old, he said, adding that for starters, any form of investing required education, understanding and confidence, and PRS was no different.

Manulife Asset Management Services Bhd CEO Edward Ooi felt that since PRS was new to the market, hence education and awareness building were crucial to ensure that Malaysians fully understand its mechanism as well as gain sufficient savings for a more comfortable retirement lifestyle. He expected PRS take-up to gradually build up over a period of time as awareness for retirement planning grew.

A higher tax relief is necessary to make this scheme more appealing, according to Wong. Currently, individuals are granted tax relief of up to RM3,000, while employers are provided tax deduction on contributions to PRS made on behalf of their employees above the statutory rate and up to 19% of employees remuneration.

With the escalating inflation rate, he said an investment scheme should be one that yields better-than-inflation rate.

Lim said ideally, the tax relief should be more to kick-start the process in attracting contributors, noting that for now many would contribute up to the RM3,000 level to benefit from the tax relief and would not see the benefit in putting away more.

However, he hoped the Government would consider increasing the tax relief since it would benefit the Malaysian ageing population.

Certified Microfinance Professional

Alhamdulillah, I've finished all three papers. Now, have to wait for the result. If I pass, will proceed with Part I in next September. This is the cluster that I missed in May 2012.

The Certified Microfinance Professional is an accredited programme by the Asian Institute of Finance, which was jointly established by the Central Bank of Malaysia and the Securities Commission Malaysia.


The main objective of this programme is to increase the effectiveness, efficiency and competencies of current capacity building efforts by various stakeholders involved in the microfinance initiatives. Special attention is given to middle-level executives who involved directly in the operation of microfinance institutions (MFIs). 


There are nine modules under this programme and the programme is flexibly designed to meet both needs, i.e. as refresher course and/or qualification in microfinance which lead to a certification known as Certified 
Microfinance Professional (CMP).

Only black-listed people affected by new borrowing guideline

Ramai bising, kononnya garis panduan terbaru dari Bank Negara Malaysia telah menyebabkan mereka gagal mendapat pinjaman atau pembiayaan daripada bank.

Sebenarnya, garis panduan tersebut hanya menekankan peri pentingnya kelulusan sesatu pinjaman atau pembiayaan dibuat berdasarkan beberapa kriteria, termasuk gaji bersih seseorang. Ini adalah untuk memastikan HANYA YANG MAMPU sahaja, memperolehi pinjaman atau pembiayaan.

Mampu di sini adalah keupayaan untuk bayar balik. Kalau congakan berdasarkan gaji pokok, tentu analisa tersebut kurang tepat kerana tidak diambil kira aliran keluar pemohon yang tidak termasuk dalam slip gaji, seperti lain-lain pinjaman atau pembiayaan luar, serta lain-lain obligations.

Pendek kata, kalau tak mampu, usah nak kumpul hutang.

*****




KUALA LUMPUR: Only non-bankable borrowers are finding it difficult to obtain loans following the introduction of a new borrowing guideline, said chairman of the Institute of Bankers Malaysia Tan Sri Azman Hashim.

He said people always believed they could secure financing without fully understanding their credit score. The banks, he said, would utilise all their experience and knowledge before loans could be disbursed.

“Banks can't say yes' to all loan applications, otherwise they would lose money, while borrowers who are unable to repay the debt go bankrupt,” Azman said, when asked to comment on the impact of the new lending guideline on consumer loans.

Azman said this at the Financial sector talent enrichment programme graduation ceremony here yesterday.

He said the people could secure financing anytime but they must be bankable or able to repay the debt. “Banks are competing like mad to offer loans at lower rates,” he said. Bernama

Source: The Star (online version)

Inflasi Ke Uols?

Aku tak tahu sama ada aku ni jenis ignorant atau aku betul-betul tak sedar dengan kenaikan harga barangan dan perkhidmatan.

Santak aku makan tengahari ke kafeteria.

Mak aiii!!! RM7 untuk 3 jenis lauk - baby kailan, ayam potong dadu masak kicap dan japanese tofu.
Seingat aku, juadah yang kurang lebih seperti ini RM5.50 - RM6, iaitu RM1.50 untuk sayuran, RM1.50 untuk japanese tofu, dan masakan ayam RM2.50. Kalau ayam goreng harganya RM3.

There gone my RM5 lunch meal. Aku benci, benci, pada dirimu!!!

Agent Banking? Apa Tu?

Some of you might have noticed the advert below by Bank Simpanan Nasional.

This is another initiative to ensure more Malaysians have access to basic financial services. Due to geographical and logistic issues, financial institutions are facing difficulty to establish physical presence in each corners of Malaysia. Now, with agent banking framework, financial institutions are allowed to appoint qualified agents to conduct basic financial services with unserved customers on behalf of the financial institution.

A guidelines will be issued by BNM to ensure this initiative will be implemented safely, efficiently and effectively and more importantly will safeguard the interest of consumers.

BSN has just started theirs and the Government has set a target of 5,000 agents nationwide. But I'm not sure whether the target is for BSN or for the financial sector.

I've read somewhere that some people in Sarawak had to spend two to three days to the nearest town in order to perform banking transactions.

I believe this effort, coupled with existing physical branch, internet banking and mobile banking would facilitate the aspiration of financial inclusion.

Do You That You Should Get 2.5% "Rebate" From TNB Every Year?

YES! I just got to know of this fact when I checked the TNB website today. The one-off deposit you paid upon the request for electricity installment is mandated to be paid 2.5% interest on an annual basis. So, make sure you check your incoming January bill.

Interest on Deposit Paid

TNB will give a 2.5% rebate on the deposit paid by the customer which will be credited yearly into the customer's
January bill.

One more thing, you may request for refund for excess deposit payment. The actual deposit to be paid to TNB is calculated based on the average of two months bill. Administratively, it is better to let it be because if your average suddenly increased, you may then have to top up your deposit.

Reduction in Deposit Amount

If the average of two (2) months bill is less than the amount of deposit paid, TNB will credit the customers' next bill. For example:

Deposit Paid	RM300.00
Average Monthly Bill	RM100.00
Average of two (2) months electricity used	RM200.00
Amount credited to account (RM300–RM200)	RM100.00

To know more about deposit and charges, click here for more details.

And you may create a TNB online account, so that you could check your bill at anytime, anywhere and perform some value-added services online.

Good luck!