Employees Provident Fund Research Articles

Determinants of employees provident fund in Malaysia: Potential factors to jeopardize the EPF sustainability

The topic of EPF sustainability has gained considerable attentions among the governments worldwide. In the wake of growing elderly population, improving life expectancy and declining mortality rate particularly in Malaysia over the years, concerns arise on the EPF’s failure to fully commit the retirement incomes provision to the elderly population in the post-retirement periods. Specifically, this paper examines the short run and long run relationships between EPF balances and its determinants; investment earnings, nominal income, elderly population, life expectancy and mortality rate from 1960 to 2014. Of the findings, elderly population and mortality rate are unfolded to represent key deterrents of EPF balances, which acts as the proxy for the EPF sustainability, both in the short run and long run cycles. Thus, new improvements to the existing EPF scheme are recommended as means to alleviate the poverty problems among the elderly population besides addressing other economic and social fronts.

Determinants of employees provident fund in Malaysia: Potential factors to jeopardize the EPF sustainability

The topic of EPF sustainability has gained considerable attentions among the governments worldwide. In the wake of growing elderly population, improving life expectancy and declining mortality rate particularly in Malaysia over the years, concerns arise on the EPF’s failure to fully commit the retirement incomes provision to the elderly population in the post-retirement periods. Specifically, this paper examines the short run and long run relationships between EPF balances and its determinants; investment earnings, nominal income, elderly population, life expectancy and mortality rate from 1960 to 2014. Of the findings, elderly population and mortality rate are unfolded to represent key deterrents of EPF balances, which acts as the proxy for the EPF sustainability, both in the short run and long run cycles. Thus, new improvements to the existing EPF scheme are recommended as means to alleviate the poverty problems among the elderly population besides addressing other economic and social fronts.

Perbezaan Sikap dan Kecenderungan Tingkah Laku Pencarum Kumpulan Wang Simpanan Pekerja (KWSP) terhadap Penamaan Wasi

The purpose of this article is to identify the differences in attitude and the tendency of the Employees Provident Fund (EPF) contributors in nominating wasi (executor) based on factors such as monthly income, level of education and marital status. This is an exploratory study that utilizes questionnaire as the research instrument. A total of 566 Muslim EPF contributors in Selangor have been selected as the research samples (purposive). Data are processed and analyzed using IBM statistical software, SPSS version 20. The attitudes towards the nomination of executor have been identified to include three elements namely; the attitude in the appreciation of goodwill, the attitude towards the sense of responsibility and attitude in the technical sense. However, the tendency in action or behaviour is represented by one element only. The findings show that there is a difference between attitudes and tendency in the nomination of executor among Muslim contributors with regard to marital status. The findings also show that there is a significant difference in attitude among the contributors with regard to monthly income while for the tendency of action there is a significant difference with regard to the level of education. Contributors who are already married have a more positive attitude towards the nomination of executor and they indicate a higher tendency to nominate executor compared to contributors who are still single. This could be influenced by the contributors’ experience and sources of information that they are exposed to, in addition to other factors such as having children and experiencing an unstable level of health.

The Financial Status, Financial Problems and Personal Well-Being of Urban Poor Youths

The fast growing economic of Malaysia has impacted more urbanization as the Malaysians migrate to cities to seek employment and education opportunities and resulted in rising living cost. Youth plays a big role in building the nation and rising living cost is one of the financial challenges as they are unable to practice saving behaviour due to their environmental and lead to the use of exploitative lenders and to financial instability and it may leads to financial stress. This study is to to assess their current financial status, financial problems and personal well-being. This study is conducted with 500 youths from 18-40 years old living in low-cost flats with income below RM3000. The respondents consist of 48.7% male and 51.3% female; 70.2% were Malays, 13.1% Chinese and 14.9% Indian and 1.4% consisting of other races. The youths’ main saving and investment portfolio is Employee Provident Fund (EPF) with 69% and less diversification in investment. Urban youths (69%) mostly own motorcycle as asset followed by house (32%), and jewelleries (16.1%). In contrast, 54.3% of them are engaged with mortgage loans and 33.3% with personal loans; the asset to debt ratio revealed that 47% of the have debts more than asset and 34% youths are inadequate of income. The main financial problem is paying bills late (88.9%) and spirituality scores the highest ranking in personal well-being with mean 7.26. Enhancing financial literacy and molding good financial behavior need to be inculcated to the youths as a coping strategy.

Mathematical Analysis of Retirement Income Benefit Based on Annuitization Approach

Retirement income inadequacy is one of the major problems to the private sector workforce with defined contribution retirement scheme. It is believed the existing system of Employees Provident Fund (EPF) in Malaysia adopted of lump-sum payment of their retirement benefits should be replaced by annuity-based scheme which can control the total retirement funds balance of the members. Using a mathematical analysis, the comparing system of retirement benefits by EPF can be analyzed. It is clearly showed that, with annuity-based scheme provide the retirees with a steady income stream for the next 20 years after retirement age.

APLIKASI KONSEP KHULTAH DALAM PENGIRAAN ZAKAT DI MALAYSIA: ANALISIS ISU, CABARAN DAN PENYELESAIANNYA: Application of Khultah Concept in Zakah Calculation in Malaysia: Analysis of Issues, Challenges and Its Solutions

The concept of khult­ah in the discussion of zakah connotes a mixure of zakatable assets owned by several owners and calculated as a single entity. In the contemporary period, many zakatable assets are being kept in a common fund that fits the definition of khult­ah of zakah, and is thus subject to the zakah obligation. This includes cash deposited in accounts, such as the Tabung Haji fund; accounts in banks, such as savings, checking, and investments accounts; Employees Provident Fund (EPF); as well as corporations, etc. However, looking at the current practices of zakah calculation, it is evident that the khultah concept has been neglected. In fact, its practice and implementation among the zakah collection bodies have not been standardized. Using the literature review methodology, this article aims to examine the views of Islamic jurists on the concept of khult­ah and its implementation and constraints that limit its implementation and any proposed resolutions, and how this concept can benefit the zakah authorities. This research has found that although the concept of khultah in zakah collection faces many challenges for implementation it can be optimized in expanding zakah collection, thus empowering its role in fulfilling the needs of the Muslim society.

APLIKASI KONSEP KHULṬAH DALAM PENGIRAAN ZAKAT DI MALAYSIA: ANALISIS ISU, CABARAN DAN PENYELESAIANNYA

The concept of khulṭah in the discussion of zakāh connotes amixure of zakatable assets owned by several owners and calculatedas a single entity. In the contemporary period, many zakatableassets are being kept in a common fund that fits the definitionof khulṭah of zakāh, and is thus subject to the zakāh obligation.This includes cash deposited in accounts, such as the TabungHaji fund; accounts in banks, such as savings, checking, andinvestments accounts; Employees Provident Fund (EPF); as wellas corporations, etc.. However, looking at the current practices of zakāh calculation, it is evident that the khulṭah concept hasbeen neglected. In fact, its practice and implementation amongthe zakāh collection bodies have not been standardized. Usingthe literature review methodology, this article aims to examinethe views of Islamic jurists on the concept of khulṭah and itsimplementation and constraints that limit its implementationand any proposed resolutions, and how this concept can benefitthe zakāh authorities. This research has found that although theconcept of khulṭah in zakāh collection faces many challengesfor implementation it can be optimized in expanding zakāhcollection, thus empowering its role in fulfilling the needs of theMuslim society.

Savings Adequacy Assessment: The Case of Malaysian Employees Provident Fund Members

This study examines the potential consequences of early withdrawals from the Malaysian Employees Provident Fund in patterns of savings adequacy by studying the impact of house purchase on household lifecycle consumption. The authors develop an overlapping generations model of a small open economy where investment is available to capital, housing, and financial instruments. Housing is modelled as an asset subject of transaction costs. In equilibrium setting, the empirical estimation of exogenous system parameters sets the optimal levels of consumption and savings. The authors perform empirical analysis by taking into consideration four different scenarios: different employment periods (18-55 vs. 25-55), different retirement periods (55-65 vs. 55-75 vs. 55-85), housing vs. non-housing consumption, and theoretical vs actual contribution rates. Actuarial evaluation shows that low-income employees can have sufficient income to meet their retirement needs in the absence of housing consumption. Policy directions are also discussed.

Poverty and Income Replacement Profile Among EPF Retiree in Malaysia

Social security policies often focus on replacement rates, which indicate retirement income or social security benefits in relation to preretirement income. The higher replacement rate among the pensioners would ensure that the ageing society would have sufficient income to lead a normal life after retirement. This study examined factors that influencing the income replacement rate of Malaysian Employee Provident Fund (EPF) retirees. The analysis was based on a nationwide survey conducted in 2013–2014 among EPF retiree. A logit model was used to evaluate the likelihood of selected socio-demographic and economic factors contributing to income of the retirees. The results indicated that around 62 % of elderly has lower retirement income compared to their preretirement income and it makes them more vulnerable to unpredictable events and financial conditions. The study suggested that the income replacement rate of elderly could be strengthened by investing in ageing workforce, raising retirement age, enhancing educational achievements of low income groups and restructuring employment. These may in turn increase the availability of skilled workers, enhancing the national productivity, increase the income security of retirees, reduce poverty, and develop economic growth of the country.

The Influence of the Types of Compensation (Financial and Non-Financial) on Job Performance among Employees at the Employees' Provident Fund (EPF) in Kuala Terengganu, Terengganu, Malaysia

Objective - This study looks at the effect of types of compensation on job performance. It was an exploratory case study conducted at the Employees Provident Fund (EPF) of Kuala Terengganu, Terengganu, Malaysia. Methodology/Technique - Quantitative method was applied in conducting this research. The instrument used for the data collection was a set of questionnaire consisted of 29 items divided into four (4) sections, namely; Section A covering the demographic section with six (6) items Section B consisted of eight (8) items measuring the effect of financial compensation (items 7 – 14) while section C measured the employees' non-financial compensation. Section C had 10 items (items 15 – 24) and lastly, section D consisted of five (5) items (items 25-29) which measured the job performance. The questionnaire was distributed to all 50 employees at the organization. However, only 40 questionnaires were then collected, making the return rate at 80%. Since the number of respondents was less than 100, only SPSS based tests were conducted, namely the descriptive, reliability and regression tests. Findings - The results show that the employees were satisfied with the compensation provided by their employer and that there is a moderate relationship between the types of compensation with employees' job performance. It was also found that non-financial compensation has demonstrated a stronger relationship to the job performance compared to financial. Novelty - In contrary to prior studies the study found out that financial compensation does not affect the job performance. Type of Paper - Empericial

Status of property nominee for employees provident fund

Status of property nominee for employees provident fund

Retirement savings investment decisions: evidence from Malaysia

This paper investigates individual retirement savings investment choices of members of Malaysia's Employees Provident Fund (EPF). The focus is on the option available to EPF members to invest part of their savings in approved unit trusts. A survey of EPF members allows a contrast with existing empirical evidence, largely drawn from developed countries. Three significant factors are identified: perceived importance of financial advisor; financial risk tolerance and perceived plan design. Gender and marital status were also significant predictors of investing in the unit trusts, though religion and religious commitment were not significant. Several implications emerge from these findings. First, results highlight the important role of unit trust consultants in individuals’ choices which in turn highlights the important role of the governing body of consultants in ensuring appropriate advice is delivered to clients. The study is relevant to the EPF as policy-maker, on the behaviour and attitudes of its members.

PENSION FUND PERFORMANCE IN EAST ASIA: A COMPARATIVE STUDY

This paper discusses and analyzes asset allocation and performance of the major pension funds in four East Asia countries, namely Malaysia, Singapore, Hong Kong and South Korea. The respective funds for these countries are Employee Provident Fund (EPF), Central Provident Fund (CPF), Mandatory Pension Fund (MPF) and National Pension Service (NPS). The impact of some economic crises on the fund performance will also be assessed. Besides looking at the individual countries, a comparison of the performance among all the funds will also be done. From the analyses, it is found that the CPF is the most conservative pension fund as it invested most of its funds in fixed income and the investments were made in the local markets, while MPF is the most aggressive pension fund as most of its funds were invested in equities. Performance of the funds was measured in terms of return on investment (ROI). All funds recorded the lowest ROI during the subprime crisis in 2008. Besides the subprime crisis, these funds were also affected by the Japanese earthquake as lower ROI were also observed in 2011.

Health care financing in Malaysia: A way forward

Malaysia has a two-tier health care system consisting of the public and private sectors. The Ministry of Health is the main provider of health care services in the country. The private health care sector provides services on a nonsubsidized, fee-for-service basis, and mainly serves for those who can afford to pay. For financing health care two types of health insurances are available currently: Private and employee based (aka SOCSO). SOCSO and Employee Provident Fund provide some coverage to private-sector employees. There are several challenges in pure Bismarckian model (private insurance etc.) like smaller portion of total population will be economically active, international competition to attract firms, and maintain/increase employment will put downward pressure on labor taxes. How to sustain universal coverage in this context? In a population setting where unemployment is high informal sector, payroll taxes will not be a major source of funds. However, it is possible to create a universal health financing system by transforming the role of budget funding from directly subsidizing provision to subsidizing the purchase of services on behalf of the entire population. The integration of services between the public and private sector is very much needed, at a cost the people can afford. At present, there is no national health insurance scheme in place. Although there are many models proposed, the main question that the policymakers need to be aware of is that of the equity of access to holistic health services for all Malaysians.

Institutional investors, political connections and analyst following in Malaysia

We examine the association between institutional ownership, political connections, and analyst following in Malaysia from 1999 to 2009. Based on 940 firm-year observations, we document a positive relation between institutional ownership, particularly by Employees Provident Fund (EPF), and analyst following, thus supporting the governance role that institutional investors play in promoting corporate transparency. However, there is no evidence that political connections matter to analyst following. The monitoring role of institutional investors, including EPF, does not appear to be any different between politically connected and non-connected firms.

Contract Farming and Gender Relations in India

Around half of those who suffer from hunger in India are ironically those who grow our food: the small and marginal farmers. With continuous structural adjustments, economic reforms and globalisation the small and marginal food growing system was transformed into a corporate controlled industrial system of agriculture. This once self-sufficient segment that produced a diversity of food crops and seeds has been forced to become a cultivator of ‘crop commodity’. In the hope to earn better wages they plunge into the labour market along with their small children and families. Being in the unorganised sector they are neither covered by insurance nor have any other legislated protective mechanisms like the employee provident fund or the legal sanction of a minimum prescribed wage. Thus, this labour force is exploited with impunity. Over time the phenomenon has almost got institutionalised in India, where labour from a particular state migrates en-mass in the cultivating season giving rise to demographic and gender issues. This paper discusses the increasing incidence of child labour and the deteriorating conditions of women on the farms. Using case studies and interviews it maps trends in three states of India.

Constraints to Urban Planning and Management of Secondary Towns in Uganda

Many towns in Uganda are growing at an unprecedented rate. By 2030 more than 50% of Ugandans will beliving in urban centres. This rapid growth of urban centres in Uganda provides for economic opportunities for manyurban residents. It also poses various challenges such as urban sprawl, emergence of informal settlements as well asurban poverty. Over 60% of the urban residents in Uganda live in the informal settlements with no basic services andinfrastructure such as piped water, decent housing, good roads, sewerage systems as well as schools and health centres.This paper aims to examine and understand the constraints to urban planning and management of secondary towns inUganda. Using an eclectic mix of research methods such as face to face interviews targeting key informants, a questionnairesurvey as well as observation, the study found that the current modernist planning approach has not achieved itsintended goal of promoting orderly urban development and improve service delivery in the secondary towns. The studyalso revealed that the urban residents are rarely involved in planning. Besides, there is an apparent mismatch betweenwhat is taught at the local planning schools and what is required in terms of planning in the secondary towns. To addressthese intractable urban challenges, it is critical that the current planning education and curriculum are reviewed to producecreative and imaginative planners that can respond more effectively to the community problems, adopt a strategyto promote strategic spatial planning that is more participatory, carry out public awareness campaigns about the need forproper planning of towns and adopt a strategy for promoting innovative funding programmes such as municipal bonds,use of the stock exchange to mobilise the required investable funds, allow the private sector to access institutional fundssuch as the employee provident fund and promote public-private partnerships.

The Concept of Rights and Protection to Employees: A Comparative Overview

While it is the duty of the to work according to their terms of reference, it is also an undeniable fact that the employers have a corresponding responsibility to provide adequate protection to their employees. Protection to employee and their rights are clearly embedded under Articles 23 and 24 of the Universal Declaration of Human Rights (UDHR: 23-24). Article 23 provides that everyone has the right to work, to free choice of employment, to just and favorable conditions of work and to protection against unemployment. Employees under the same Article has been accorded without discrimination, the right of equal pay for equal work and in terms of remuneration worthy of human dignity supplemented if necessary by other means of social protection. Article 24 provides that have the right to rest and leisure, including limitation of working hours and periodic holidays with pay. All these provisions are not new under the Islam. This article will attempt to elucidate that the concept of rights and protection that is accorded to under the civil law structure have long been enjoined by the Shari'ah.Concept and Framework of Employment Under the Civil LawLaws governing employees' rights and protection in Malaysia can be found under the Employment Act 1955, Industrial Relations Act 1967, Employees Social Security Act 1969, Employees Provident Fund Act 1991, Occupational Safety and Health Act 1994 and Trade Unions Act 1959. An employee is defined under Section 2 of the Employment Act (Law of Malaysia, act 265) as any person or class of persons (a) included in category in the First Schedule to the extent specified therein; or (b) in respect of whom the Minister makes an order under subsection (3) or section 2A. In the situation where an offer of employment is made by an employer to a prospective employee, the said offer being duly accepted by such person or persons, the laws governing the relationship between an employee and employer commences.The Employment Act 1955 basically regulates the contract of service of an employment contract in the private sector by laying down the basic and minimum terms and conditions of the employment contract, setting out work, weekly rest day, public holidays, annual, medical and maternity leave as well as termination and lay off benefits. It must, however, be observed that the said Act applies only to those with earning not in excess of RM1500 per month or for those who are in the manual labor occupation (Act 265: 2{1}) . The Industrial Relations Act 1967, unlike the Employment Act 1955, offers a wider scope of application. It applies to all be it from the private or the public sector as defined under Article 132 of the Malaysian Federal Constitution and no limit is imposed in regards to the type of occupation.Concept and Framework of Employment Under the ShariahUnder the Shari'ah there exist no regulations on employment in a codified manner. Basically, all issues were attended through the divine revelation of the Quran and Sunnah. Thus, the need to have codified employment laws did not arise then. Employment were relied upon the principle of 'ubudiyyah (total submission to Allah), mas'uliyyah (accountability) and itqan ( determination). Based on these principles the people were taught that the main purpose of employment apart from earning livelihood, was to seek the pleasure of Allah. The main objective of the employees was to seek the pleasure of Allah which was enjoined by Allah in Surah al-Dzariyyat verse 56 which provides that I created the jinn and humankind only that they might worship Me. With this direction in mind, the have the responsibility to work with sincerity and not to enter into wrongful personal gains in discharging their duties and be fully aware that they will accountable for their acts. Allah has promised rewards for goodness and punishment for wrongful acts be held in this world or the hereafter. …

Implementation of Factories Act, 1948 in Haryana – A Comparative Study of Three Industries

The First Factories Act was passed in 1881 for those industries, which employed 100 or more workers. Amendments to this Act were made in 1890, making it applicable to the undertakings having 50 or more workers as per the recommendations of the Bombay Factories Commission, 1890. After independence legislations like the Employees State Insurance Act, 1948; the Factories Act, 1948; Minimum Wages Act, 1948; Industries Act, 1951; the Employees Provident Fund, Family Pension Fund and Deposit Linked Insurance Fund Act, 1952; Maternity Benefit Act, 1961; the Payment of Bonus Act, 1965; the Payment of Gratuity Act, 1972 etc. were passed. However, the Factories Act, 1948 is considered more important because it incorporates safety, health and welfare measures for workers. The universe of the study consists of three industrial undertakings namely National Fertilizers Ltd., Panipat, SPL Ltd., Bahadurgarh and Cooperative Sugar Mill, Karnal in Haryana.

Mutual fund selection criteria: evidence from Malaysia

PurposeUnder its “Members Investment Scheme” strategic initiative, the Malaysian Employees Provident Fund (EPF) permits its members to invest part of their retirement savings in approved external funds. Given there is an increasing number of unit trust funds available in the market, it is not an easy task for members to make this investment choice decision. The purpose of this paper is to explore the perceived importance of fund selection criteria within the context of retirement savings in Malaysia. In addition, it also seeks to examine whether there is a relationship between religious affiliation and choice of fund.Design/methodology/approachA questionnaire‐survey was carried out among 440 individual EPF members.FindingsThe survey results show that the ranking of mutual fund selection criteria differs between Muslim and non‐Muslim members. Past performance was the most important criterion valued by the non‐Muslim EPF members. In line with conforming to religious belief, the fund's commitment to Islamic principles was the most important criterion considered by Muslim EPF members. Both type of religious group members also considered the overall reputation of the fund as important criterion in selecting a mutual fund.Research limitations/implicationsThe paper is subject to the normal limitations associated with survey research.Practical implicationsThe findings of this study can help fund management companies to better promote their funds to the right investors.Originality/valueThe paper provides empirical evidence regarding mutual fund selection criteria from the perspectives of individual investors.