Employees Provident Fund Research Articles

Retirement Preparedness among Malaysia’s Low-Income Private Sector Employees: A Conceptual Model

Retirement in Malaysia starts when individuals reach 60 years old. This is when individuals’ income will stop streaming in, and they need to use their savings, pensions or retirement scheme to support themselves post-retirement. There are two primary retirement schemes in Malaysia, which include (1) Defined Benefit (DB) for government servants and (2) Defined Contribution (DC) for private-sector workers managed by the Employee Provident Fund (EPF). The increasing aging population and the rise in retirees in Malaysia with a lack of retirement savings emphasize the significance of retirement preparedness. The life expectancy in Malaysia has increased, with males and females having an average lifespan of 71.8 years and 77.2 years, respectively. Malaysia's income groups can be divided into three groups: T20 (top 20%), M40 (middle 40%), and B40 (bottom 40%). This study will only focus on private sector employees with EPF accounts and the B40 group with an income of RM4850 and below. The B40 has the lowest savings in EPF, with only 1.01%, compared to the M40, which amounts to 16.56%, and the T20, which holds the most savings at 82.42%. The main objective of this study is to investigate retirement preparedness among low-income (B40) private-sector employees. By focusing on the direct relationship between attitude and social influence and their impact on retirement preparedness, the findings are intended to support financial institutions, policymakers, and organizations in designing and implementing effective financial education and literacy programs tailored to the needs of the low-income (B40) group.

A Study on Employees Perception towards NPS & EPF

The study "A Study on Employees' Perception towards NPS & EPF" investigates the views of employees regarding two of India's most prominent pension schemes: the National Pension System (NPS) and Employees' Provident Fund (EPF). The research aims to understand employees' preferences and satisfaction levels with these schemes based on factors such as returns, risk, ease of access, transparency, and tax benefits.NPS, being a market-linked pension scheme, offers higher flexibility and potential for better returns but also carries a higher risk. It is typically favored by employees who seek control over their investments and are comfortable with market fluctuations. In contrast, EPF is a government-backed, more stable scheme, offering lower risk but fixed returns. It is preferred by risk-averse employees who prioritize security over potentially higher gains. Through primary data collected from employees across different sectors, the study highlights key insights into how employees' perceptions differ based on their employment type, income levels, and financial goals. Understanding these perceptions is crucial for policymakers and employers to address gaps in awareness and satisfaction, thereby encouraging more informed decisions for retirement planning and improving participation in both pension schemes. The study contributes to a broader understanding of retirement planning preferences in India

Retirement Planning Decisions: Analyzing Behavioral Influences on Pension Scheme Selection in Malaysian Statutory Bodies

Since gaining independence in 1957, Malaysia has classified employees in various public services as civil servants. Statutory bodies and local authorities were later established to provide specific public services, and their employees were placed under the Employees Provident Fund (EPF) contribution scheme instead of the government pension scheme due to the lack of constitutional amendments. Following the Harun Salary Commission’s recommendations in 1975, these employees were given the choice between the pension scheme and the EPF scheme, with most opting for the pension scheme. This preference has placed significant financial strain on the government's pension resources. To alleviate this burden, current efforts aim to encourage government servants to choose the EPF scheme and consider placing future recruits under this scheme. This study aims to identify the factors influencing statutory bodies and local authority employees to opt for the government pension scheme despite the availability of the EPF scheme. Utilizing the Life-Cycle Theory to understand general savings behavior and the Theory of Planned Behavior to examine decision-making processes, a quantitative approach was employed. Data were collected via a questionnaire survey with 176 respondents from statutory bodies and local authorities in Kota Kinabalu. The PLS-SEM model was used to analyze the data, testing validity and reliability against Common Method Bias. The results indicated that Subjective Norms and Perceived Behavioral Control positively influenced the choice of retirement scheme, while Attitude did not. These findings highlight the role of social influences and perceived control in retirement decision-making.

ASEAN in the World’s 100 Top-Ranked Pension Funds: Lessons for Indonesia

The research explored the pension funds of Singapore, Malaysia, and Vietnam, which had managed to exceed Indonesia’s total pension fund assets under management despite having smaller populations and workforces. With Indonesia aiming to increase its pension funds to 60% of its GDP by 2045, the research aimed to extract lessons from the investment strategies, governance structures, and other key indicators of the pension funds in these three ASEAN countries to aid in achieving Indonesia’s target. This research utilized a document analysis method to gather data on top-ranking pension funds in ASEAN countries, including the Central Provident Fund (Singapore), Employees Provident Fund (Malaysia), Social Insurance Funds (Vietnam), and BPJS Ketenagakerjaan (Indonesia), with qualitative and descriptive statistics methods employed for data analysis. This research has found that Singapore and Malaysia excel in managing their pension fund accounts by offering innovative services tailored to meet the needs of their citizens. Singapore has special home ownership and asset management accounts with a strong social media presence. Malaysia offers both conventional and Sharia-based services, including services for the hajj, which cater to the religious needs of its Muslim population. Meanwhile, Vietnam has a more inclusive system that covers foreign workers, similar to Indonesia’s, but demands that foreign workers join the program should align with available program information in English.

Shareholders’ Monitoring and Online Disclosures of Minutes of Shareholders’ Meeting

Making detailed annual general meeting (AGM) minutes available online allows absentee investors to understand the discussion that took place during the AGM, and other interested parties to gauge the intensity of investor activism and stakeholder engagement from the questions posed. This paper investigated the effects of shareholders’ monitoring through the Minority Shareholders Watch Group (MSWG), the Employees Provident Fund (EPF), and other government-linked institutions on corporate communication via minutes of shareholders’ meeting. This study also incorporated firm size, audit quality, profitability, and grey directors as control variables. Based on a sample of 261 listed firms with financial year ended 31 December 2016 who held their AGMs in 2017, the findings showed that shareholders’ monitoring through the MSWG, EPF, and other government- linked institutions were significant and positively associated with corporate transparency. This implies that minority and institutional shareholders’ activism can be the advocate in pushing for dissemination of online corporate disclosure to enhance the information environment, in align with agency theory.

Post-Pandemic Challenges of Textile Industry Workers in India: Analysis of Social Security Laws of Select Asian Countries

Abstract The COVID-19 pandemic ensued a challenging period for global health; however, the loss of livelihoods throughout the lockdown also led to a significant economic issue that warranted a reassessment of the existing socio-economic structures. Manufacturing lines were severely impeded, particularly in the Indian textile industry, the second-largest employer and labour-intensive industry. The initial lockdown did not provide manufacturers enough time to prepare for the impending catastrophe, compelling many to shut down their operations. The above circumstances highlighted the lack of resilient social security laws in India. Despite initiatives like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), the Employees’ Provident Fund (EPF) scheme and other initiatives like grain distribution to families below the poverty line, lack of economic security came to the forefront. There is a need to have a competent social security legal framework in India to ensure economic stability for all that would fall in line with the noble ideas of the framers of the Constitution as enshrined in the Directive Principles of State Policy, the guiding light for all state action in India. India has not ratified the International Labour Organizations Social Security (Minimum Standards) Convention of 1952. The focal area of the current research would be to look into the sufficiency of the legal framework (International and National) to protect the economic interests of the workers. The authors examine the following: 1. Examine the Code on Social Security, 2020 passed by the Indian legislature interpreting it in light of the COVID-19 pandemic and its effect on textile manufacturing in India along with other steps initiated by the government for the textile industry. 2. Carry out a comparative analysis of the social security laws of other Asian countries (Bangladesh, Vietnam, and China) to carve out best practices that can be adopted in India. 3. Analyse and contrast the statistical data of the four predominant textile manufacturing and exporting economies on selected parameters.

Examining the Sufficiency of Private Pension Fund in Malaysia using Monte Carlo Simulation

Retirees must make wise plans to have enough savings in order to continue living at the same level after retirement. Retirement planning is essential for ensuring enough retirement funds, which give Malaysians elderlies with a source of income to maintain their standard of living and keep them out of poverty. Uncertainties in dividend rates, interest rates, and inflation have made it difficult for Malaysia's private pension system, notably the Employee Provident Fund (EPF) scheme, to stay financially viable and capable of offering pensioners adequate protection. Thus, this study takes into consideration these important factors in analyzing the sufficiency of the private pension fund in Malaysia for different income groups namely top 20% of income earners (T20), middle 40% income earners (M40) and bottom 40% income earners (B40). Several scenarios are prepared according to Malaysian’s norm to examine the sufficiency of pension fund for each income group. The differences among the scenarios are income groups, retirement age and number of pension fund withdrawals. Then, the Monte Carlo simulation is run to calculate the accumulated value of the pension fund. Following that, the estimated monthly pension amount and the income replacement ratio are calculated to measure pension sufficiency. The results show that the income replacement ratio on average is significantly lower for all income groups as compared to the World Bank standard which stated that the income replacement ratio should not be below 70%. The results also show similar ratio with the current income replacement ratio recorded in Malaysia currently. When the number of withdrawals is taken into consideration, the income replacement ratios on average also show a decreasing pattern for all income groups. These findings indicate that the income replacement ratio in Malaysia is below the ideal rate and the pension amount is not sufficient to maintain the standard of living and purchasing power of retirees. Therefore, the government should take some action regarding this problem focusing on the B40 income group on how to increase their pension fund for better quality of life during retirement and avoid poverty.

A Correlation Analysis of Knowledge, Experience, Religious Belief, and Behavior of Malaysian EPF Investors Towards Investing in Islamic and Conventional Unit Trusts

The objective of the study is to examine the relationship between knowledge, religiosity and experience, and the behavior of employee provident fund (EPF) investors investing in Islamic and conventional unit trusts. The variables are extracted from the literature to achieve the objective. Additionally, 125 valid responses were composed through surveys of Malaysian government and private employees. The Statistical Package for Social Sciences has been applied to analyze the collected data, using correlation analysis techniques. This research found that knowledge about Islamic unit trusts and religious beliefs have a positive significant relationship with the EPF investors’ behavior of investing in Islamic unit trusts. Moreover, the experience of investing in Islamic and conventional unit trusts is also positively and significantly associated with the EPF investors’ behavior of investing in Islamic and conventional unit trusts, respectively. As research in this area is insufficient, this study will play a vital role for the unit trust industry in exploiting the financial strategies that are highly and positively observed by Malaysian EPF investors.

Maximizing Retirement Savings: Strategic Forecasting of Employees’ Provident Fund (EPF) Dividends

This study embarks on an analytical drive to project future dividends of the Employees Provident Fund (EPF) by harnessing the historical dividend data spanning from 1952 to 2023. With a comprehensive methodology that fuses both descriptive and inferential statistical approaches, the study conducts an in-depth examination of the fluctuations and trends in EPF dividend rates across seventy years. Utilizing EXCEL statistical tools, such regression models, it examines into identifying the pivotal factors that have historically influenced EPF dividends, thereby enabling the prediction of their future trajectories. This endeavor aims to refine the strategies employed in financial planning, ensuring they are more aligned with predicted outcomes. The study uncovers a pattern of volatility in EPF dividends, marked by significant highs and lows which correspond with the changing tides of the economic landscape. The development and application of a predictive model, deemed most effective through this study, shed light on potential future trends of EPF dividends. This model is instrumental in proposing a strategic approach for EPF contributors, tailored to navigate the complexities of investment planning with foresight. Moreover, the significance of this study transcends the boundaries of dividend prediction. It lays down a comprehensive framework that deepens the understanding of how retirement fund dividends are influenced by economic fluctuations. This contribution is invaluable for investors and policymakers alike, providing them with the foresight needed to make informed decisions that could preemptively address the challenges posed by future economic shifts. In essence, this paper makes a profound contribution to the domain of financial planning and analysis by advocating for a shift towards a more proactive and informed management of retirement savings.

Determinants of Special EPF Withdrawals among Malaysian Employees Amidst the COVID-19 Pandemic

In response to the COVID-19 pandemic, Malaysia has implemented various financial relief measures to support those adversely affected by the crisis. These measures primarily target individuals who have experienced job loss or a reduction in wage due to the pandemic. One of the options available to individuals was the premature withdrawal from their social security account, specifically the Employees Provident Fund (EPF) account, through various programs such as i-Lestari, i-Sinar, and in 2021, i-Citra, and also “Pengeluaran Khas,” in 2022, even though such withdrawals are said to be potentially risky. Conducting a qualitative method by using an in-depth interview, this paper determines the factors associated with employees’ EPF withdrawals during the COVID-19 pandemic in Malaysia. Therefore, this paper identifies the factors of withdrawals and the relationship between characteristics such as financial hardship, precautionary demand for cash, uncertainty over finances, and immediate financial obligations and uses it as a guideline for building a framework to enhance the current social security system in Malaysia and manage future unforeseen crises. Based on the findings, this study proposes a range of policies based on the identified factors of early EPF withdrawals.

Integrating Theory of Planned Behaviour to Explore Young Private Sector Employees’ Retirement Planning Behaviour

The concern surrounding retirement planning has become a prominent source of concern among the younger labour force in Malaysia. A substantial percentage of individuals between the ages of 18 and 40, who are employed in the private sector, rely on the Employee Provident Fund (EPF) as a means of saving for their retirement. The government's COVID-19 policy allowed for the withdrawal of money, leading to a reduction in savings levels for this particular group. The increasing incidence of bankruptcy cases and insufficient reserves is a worrisome factor for the future survival prospects of upcoming generations. Although several retirement initiatives have been introduced by governmental agencies and financial institutions, a significant number of young Malaysians still lack the necessary dedication to start saving for retirement at an early stage. According to the existing data, people are more likely to spend money than to save it. This study seeks to examine the factors that influence the retirement planning behaviour of young adults in Malaysia. The study suggests that spending attitude and financial literacy are dependent variables, whereas saving intention acts as a mediating variable, and retirement planning behaviour is also a dependent variable. The objective of this study is to enhance the current body of knowledge by developing a theoretical framework that explains the role of saving intention as a mediator between financial literacy and saving attitude in the context of retirement planning behaviour. According to the theory of planned behaviour, the desire to engage in saving behaviour is influenced by both financial literacy and attitudes towards saving. The characteristic that has the strongest link with retirement planning activities is the individual's level of saving intention. The suggested recommendations for further investigation are delineated.

Comparative Analysis of Malaysian and Indonesian Retirement Plan

In Malaysia, the Employee Provident Fund (EPF) was established Under the Employees Provident Fund Act 1991 as a social security organisation that offers members trustworthy and efficient savings management and it is open to both personnel. In contrast, the Private Pension Administrator (PPA) developed the Private Retirement Scheme (PRS), a retirement programme, to address retirees' insufficient resources for meeting their retirement expenses in light of rising living standards and longer life expectancies. Having to see the similar aspects between EPF and PRS in terms of creating savings and their importance towards securing a certain degree of comfort for retirees, the purpose of this study is to provide a thorough explanation of how these two retirement plans can benefit all Malaysian private employees. Similar to Malaysia, all private sector workers in Indonesia are also required to participate in retirement plan. Thus, the purpose of this study is to evaluate the similarities and differences between Malaysia's and Indonesia's retirement plan. This research employs a qualitative approach, by conducting library-based research on the relevant materials including, but not limited to statutory provisions, case laws, law textbooks, journal articles, newspapers, conference proceedings, and seminar papers. At the end of the discussion, the findings show that both countries have their own retirement plans and have the same goal which is to provide facilities to all private-sector workers.

Attitude, Subjective Norms and Perceived Behavioural Control Towards I-Sinar User Behaviour Amongst UniSHAMS Staff Members

I-Sinar, a programme initiated by the Employee Provident Fund (EPF, KWSP), involves a savings withdrawal scheme that is intended to help members who face retrenchment or loss of income, continue with day-to-day life during a pandemic crisis. Eligible EPF investors may withdraw up to 10% of their savings in their Account 1 with a minimum balance of RM 100. Many Malaysians sought this opportunity and made I-Sinar withdrawals in order to cover daily expenses during the pandemic. It is essential that the user (one who has withdrawn their savings by using the I-Sinar facility) practice proper financial management in order to avoid cash leakage. Therefore, the objective of this research is to study the behaviour of I-Sinar users amongst UniSHAMS staff members. Both quantitative and qualitative methods were used in this research. This research intends to provide guidelines on intelligent and thrifty money management techniques for the use of UniSHAMS staff members.

Informal Workers in India, Issues And Challenges: Comprehensive Analysis

According to the Code on Social Security, 2020, an unorganized worker is one who works from home, Employees in the organized sector who are not protected by the Industrial Disputes Act of 1947 or Chapters III to VII of the Code, such as Employees Provident Fund, Employees' State Insurance Corporation, Gratuity, Maternity Benefit, or Employee's Compensation, may be self-employed or wage workers in the unorganized sector. In India around half of the Gross Domestic Product (GDP) of the country and more than 90% of the total workforce have remained informally employed in informal sector. Since India got independence this informal economy have played an important role for socio economic development process especially in agriculture and allied activities. Informal employment contributes more than 95% of total workforces in Indian agricultural sector. This paper presents various issues and challenges faced by informal workers in India and discuss about it’ remedies. Also in this paper we have discussed about the current scenario and condition of informal workers force in India. India needs to have employment-intensive growth in the future if it is to properly resolve the demographic dividend conundrum.

Nomination and Its Legal Status Concerning Moveable Estates for Muslims and Non-Muslims in Malaysia

This paper delves into the nomination overview and its status concerning movable estate only for Muslims and non-Muslims in Malaysia from both Islamic and Civil Law perspectives. Discussions focused on issues revolving around movable property such as the Pilgrimage Fund, Employee Provident Fund (EPF), unit trust and share, takaful and insurance, and pension. The pertinent legal provisions were also analyzed to ascertain legal application in its administration. It concludes that Muslims are subject to Faraid besides civil law while civil law applies to non-Muslims. Thus, the findings indicate that for Muslims, legal frameworks and guidelines are indeed necessary for uniformity.

Impact of inflation severity on retirement savings: A simulation analysis of projected accumulation and de-accumulation

Statistics have shown that by the age of 60, Malaysian life expectancy for males and females is expected to be 17.5 and 20.1 years, respectively. Thus, if not properly addressed by the authorities, the ageing population would contribute to a serious problem for the public by having an inadequacy of retirement wealth to sustain their lives. Considering all of these issues, the present study seeks to comprehensively examine the extent to which inflation adversely affects retirement savings. This investigation holds the potential to yield valuable insights into the accumulation of retirement wealth, thereby addressing the issue of insufficient retirement income, particularly among members of the Employees Provident Fund. Using a mathematical iteration formulation approach, the accumulation and de-accumulation of retirement wealth subject to inflation are formulated to examine the severe impact of this economic factor. Ironically, the disruptive effect of inflation on retirement savings is not severe. It is the power of compounding returns generated by dividend profits that absorbs the real impact. Despite the fact that this is a useful insight, people must plan well for their retirement savings to avoid having them eaten up by inflation. The results showed that inflation disruptions of varying degrees can negatively impact retirement funds. In order to effectively mitigate the potentially detrimental impact of inflation on retirement savings, it becomes imperative to adopt a strategic approach that encompasses various measures, like the exploration of investment opportunities that possess the potential to generate returns surpassing the prevailing inflation rate.

Exploring Investment Governance within Social Security Organization: A Key to SDG Achievement

The Employees Provident Fund is a prominent Social Security Organization in Nepal, and it aims to invest the long-term savings it accumulates in various sectors of national and infrastructure development. This investment is intended to create diverse employment opportunities for Nepali citizens, all while maintaining a robust governance mechanism to safeguard the collected contributions, ensuring there are no losses. This strategy aligns with the goal of achieving sustainable development. In order to address the pressing issue of unemployment, which has been consistently raised as a concern by the International Labor Organization, there is an imminent requirement to adapt and enhance the investment framework within the broader Investment Governance concept. This adaptation is necessary to actively generate job opportunities in the areas where unemployment is a significant concern. The main objective of this research is to assess the awareness of current contributors to the Employees Provident Fund regarding Investment Governance and Sustainable Development Goals. Additionally, it aims to validate the developed theory of Investment Governance and its impact on achieving SDGs in practical terms. Furthermore, this study intends to offer insights into the current state of the Employees Provident Fund's investment mechanism, serving as a valuable resource. The result shows that the existing contributors to the Employees Provident Fund in Nepal are highly aware of investment governance. Furthermore, the study has confirmed the accuracy of the developed theory through these tests involving the contributors of the Employees Provident Fund. This fund is a prominent Social Security Organization in Nepal and plays a vital role in focusing its long-term savings on investments in key sectors such as social (health, production, education, and tourism) and the environment. These investments are crucial for achieving Sustainable Development Goals (SDGs), particularly in generating employment, which is a significant aspect of the 8th goal among the SDGs. Beyond examining investment governance, this study also highlights the importance of further exploration into the role of the Employees Provident Fund in advancing national development.

Retirement Wealth Adequacy Estimation Based on Income Group Classification: A Case Study in Malaysia

The inadequacy of retirement wealth can significantly impact a country’s social support system. The increase of the size of the elderly population in line with the constant growth of life expectancy among Malaysians has triggered a question, are there enough resources to cover needs in retirement years? The main objective of this study is to estimate the retirement income adequacy of future retirees under a defined contribution (DC) plan, which is the Employee Provident Fund (EPF). The projection of retirement income adequacy uses cross-sectional data from the Malaysian Household Income Survey (HIS) 2014, based on 14,169 sample households. The households are categorized according to three different income groups, including Top 20% (T20), Middle 40% (M40) and Bottom 40% (B 40). In addition, this research also investigates the demographic and socio-economic determinants of retirement wealth adequacy using OLS and logistic regression. The result shows that 26% of households in the sample have inadequate retirement income, especially households in the B 40 group.

The Future of Sharia-Based Employment Insurance for Indonesia’s Employment Insurance Agency (BPJS Ketenagakerjaan): Learning from Malaysia

The growing Islamic economy worldwide has inspired the launch of “Indonesia’s Islamic Economic Masterplan 2019-2024” in May 2019. The blueprint aims to establish a sustainable domestic Islamic market and make Indonesia the key player in the global Islamic economy and finance hub by developing several sectors such as Islamic banking, Islamic capital market, social security, and Islamic social sectors. Data from Indonesia’s Financial Authority shows a huge gap between conventional and Islamic insurance regarding their contribution to Indonesia’s GDP in the third quarter of 2018. The former contributed 31,7%, while the latter only had 1,13%. It seems that Indonesia, home to the world’s largest Muslim population, is left behind among other Muslim majority countries to create an Islamic economic market. In contrast, Malaysia with fewer Muslim inhabitants has succeeded in building a feasible sharia economic market and Islamic insurance in its social security institution called the Employees’ Provident Fund (EPF). This study uses a comparative study to observe phenomena and analyze differences and similarities to be interpreted or evaluated, and comparisons will be made between Indonesia and Malaysia as units of analysis. Our findings indicate that the probability of developing Islamic insurance in social security institutions not only depends on the precise scheme that BPJS Ketenagakerjaan will introduce as the provider but also on the willingness of the national government to build a new regulatory framework.

Investment Patterns and Sustainability of Social Security Schemes in Nepal

Social security programme based on contributions of employees was introduced in Nepal by enacting the Employee Provident Fund Act - 1962, primarily to address the security needs of the retiring population. Employees Provident Fund, Citizen Investment Trust, and Social Security Funds are three major competing institutions in the social security market in Nepal. This paper explores the investment of funds accumulated through the contribution of employees for value creation as a means to enhance financial viability and further assesses the long-term sustainability of such programmes. The study is based on reviewing and analyzing the documents relating to the defined objectives and targets, investment policies, investment portfolio, legal framework for investment, and achievements. The study finds that all three social security institutions (SSIs) end up investing the accumulated funds in fixed deposits in the banking and financial institutions (BFIs.). This is despite the act empowering them to mobilize the accumulated funds in several productive sectors and set competitive investment goals. This indicates that they fail to explore productive avenues for sustainable investment of the accumulated funds, which could contribute to the economic development of the nation. The current challenges in the social security system in Nepal are the increasing number of pensioners and the need for sustainable investment; making it imperative for the Nepalese SSIs to evaluate their investment priority; feasibility and diversify for higher and long-term returns; focusing on areas that contribute to economic growth and development; and generating employment opportunities.