A Bitter Pill to Swallow

A 4.5% dividend payout by EPF for 2008 is within expectation amid the global financial turmoil. However, it is still a bitter pill to swallow for millions of EPF contributors as low dividend would adversely affect their retirement funds in a long run. Just about a couple of years ago EPF allowed its members to withdraw periodically to invest in Unit Thrusts as probably EPF also realized their low dividend payout for the past 10 years would certainly not satisfy its members’ expectations. Hence, allowing its members to invest portion of their EPF savings on higher risk Unit Thrust, hoping to generate more decent returns is a logical move. I have invested quite a fair bit in the Unit Thrusts and the investment was also badly affected by the sharp decline in global share markets. The Unit Thrusts used to generate a decent 15 to 20 % return per year during good times but also went kaput amid the current financial crisis. It looks like EPF is still a safer mean for retirement saving.

EPF should realize that the responsibility they shoulder is too big for them to take any high risk portfolios as millions of people are depending on them for their retirement. What we can hope is that EPF remains professional and transparent in their dealings and should put the interests of its members at the first priority. To manage 300 over billions is by no mean easy, but if the interest of its member is put at the utmost importance, at least EPF contributors can be assured of a decent retirement. Moreover, the dividend payout should be above the inflation rate or otherwise, the growth of the retirement funds for millions of the contributors will also be at stake.