Malaysia's top pension fund sees minimal hit from extra outflows

[KUALA LUMPUR] Malaysia's largest pension fund said it expects the additional outflow from withdrawals by members affected by the pandemic to have a minimal impact on its long-term returns.

The Employees Provident Fund, which has US$216 billion in assets, said it had been expecting withdrawals since the coronavirus hit early this year and prepared for it by boosting its cash levels.

"In the case where the EPF has to rebalance its portfolio, it would look into its liquid assets to cater for the withdrawal," the fund said in an emailed response to questions. "It will be done in an orderly manner without being disruptive to the market and its own long term investment strategy." The state-owned pension fund's comments come in the wake of concerns that any large withdrawals by members would hurt its returns and a selldown of its portflio would weigh on the stock market. It owns stakes in many of Malaysia's biggest publicly-traded companies including Axiata Group, Tenaga Nasional and Malayan Banking.

Finance Minister Tengku Zafrul Abdul Aziz last month allowed more than 8 million EPF members to tap their retirement funds, and raised the withdrawal limit to US$2,463, agreeing to proposals from both the ruling coalition and opposition parties.

EPF said its ability to invest is not limited to contributions but also determined by its investment income.

"The impact of i-Sinar on EPF's cashflow will largely be dependent on the take up, which will vary based on the individual needs," the pension fund said.

BLOOMBERG