the guardian of retirement - kwsp.gov.my · pdf filelembaga kumpulan wang simpanan peerja...

4 CorporateOverview

5 Awards

6 Five-YearFinancialHighlights

8 CorporateDiary2015

10 Chairman’sStatement

The Guardianof Ret irement

Theboardhastoensurethatwestickfirmlytoourlawsandregulations,andobservingtherightgovernance.Thesearethetenetsofourguidingbehaviour.

Chairman, employees Provident Fund tan Sri Samsudin osman

Annual Report 2015Lembaga Kumpulan Wang Simpanan PekerjaEmployees Provident Fund Board

4

TheGuardianofRetirement-IntegrityandGovernance -LeadingtheWay-GivingValueBack-CheckandBalance

-TheFinancials-AdditionalResources

coRPoRAtE ovERvIEW

InlinewithourMissiontoprovidethebestretirementsavingsscheme,wehaveevolvedfromprimarilyatransaction-centricorganisationtoaprofessionalfundmanagementorganisationwithastrongfocusonretirementsecurity.

We oversee a mandatory retirement savings scheme for allprivateandnon-pensionableemployeesinthecountry.TheEPFisbasedonadefinedcontributionmodelwherebothemployees

ToProvidetheBestRetirementSavingsScheme.

MISSIoN

vISIoN & MISSIoN

coRPoRAtE ovERvIEW

Our shared values:

EPf SoNG

Ourmandateisnotjusttopreservebutalsogrowmembers’assets.Asat31December2015,ourtotalinvestmentassetsstood at RM684.53 billion. Guided by stringent investmentpolicies, we invest our assets into a portfolio of safe yet,relativelyhigh-yieldinginstruments.Ourdiverseassetclassescomprising government bonds and securities, balanced byinvestmentsinequities,moneymarketinstrumentsandrealestateandinfrastructure.

ToBeaWorld-ClassSocialSecurityOrganisationProvidingtheBestRetirementSavingsforMalaysians.

vISIoN

“The employees Provident Fund (ePF), established in 1951, is one of the oldest and largest retirement funds in the world. We have transformed significantly from our

early days, mainly driven by our Vision to be a world-class social security organisation providing the best retirement savings for Malaysians.”

andemployerscontributeafixedpercentageoftheemployees’monthlysalaryintotheemployee’s(member’s)account.Bylaw,wealsoensurethe536,489employersregisteredwiththeEPFasat31December2015,fulfiltheirresponsibilityofcontributingtowardstheiremployees’retirementsavings.Ourmembershipgrowsbytheyearandtodaystandsat14,550,355,ofwhom6,794,604areactivemembers(thosewhohavecontributedatleastoncewithinthe12-monthperiod).

Weinstilthevaluesofteamworkbybreakingdownsilostocreateahealthyandvibrantworkingenvironment.

Wepracticeazero-tolerancepolicyonbreachesofintegrityandethicsinordertomaintainthehighestleveloftrustandconfidenceofourmembers.

Wearecommittedtoprovideourmemberswithfast,accurateandpleasantservicewhetherthroughkiosks,telephone,face-to-face,onlinetransaction,emailortraditionalmail.

Weencourageaperformance-drivencultureandensureEPFemployeesundergotrainingandskillsenhancementinordertokeeppacewiththerapidchangesintheoperatingenvironmentbyusinglatesttechnologiesforamoreeffectiveandefficientservice.

Integrity customer focused

TeamworkContinuous ImprovementContinuous Improvement

The age of retirement would either come soon or still faraway, depending on thedemographyof ourmembers, butwe remain committed to provide the best service backedbyefficientoperationsandperformanceaswe continue toempowerourretirement.

KWSP

KamikomitedKamisediaberbaktiVisidanmisiTerusdihayatiDimataduniaharapankami

KWSP

KamiberikrarNilaimurnidijagaTelusdanintegritiAmalanbersamaKualitiperkhidmatanTetapdiutama

Chorus:

KepadaahliKepadamajikanJanjikamiAndadiutamakan

BerkorbanpastiIkhlasmenaburbaktiBersatuhatiDemimuKWSP

YakinkamimelangkahMenujuwawasanyangcemerlangDemisimpananharituaandaDanpembangunannegaraDemiKWSPyangkucinta

the essence of the EPf SongThesongexpressesthededicationandcommitmentof EPF staff to give their very best as part of ourpromise in maintaining a high standard of servicedeliverytomembersandemployers.

We realise our mandate to take care of members’retirementsavingsremainatoppriority.

Everydayisaboutgivingourverybest;nowandintothefuture.


5



AWARdS

• SGAMICTAwardfore-Pengeluaranproject

• Malaysia’s100LeadingGraduateEmployers(Government-LinkedCompaniesSectorFinalist)

• GraduanBrandAwards2014:

• FirstPlaceforTop3CompaniesbyIndustry(Government)

• 29thPlaceforTop50Companies

• 92thPlacefor100LeadingGraduatesEmployee

• CleanAuditCertificatebytheNationalAuditDepartmentforFinancialStatement2014

• TransformationExcellence-ASSAAward(AseanSocialSecurityAssociation)

• HRAsiaBestCompaniestoWorkforinAsia2015

NAtIoNAL LEvEL

INtERNAtIoNAL LEvEL

Malaysia’s 100 Leading Graduate Employers (Government-Linked Companies Sector Finalist)

hR Asia Best companies to Work for in Asia 2015

SGAM Ict Award for e-Pengeluaran project

Transformation Excellence - ASSA Award (ASeAn Social Security Association)


7

(RM’Million)

(RM’Million)

(RM’Million)

(%)

(RM’Million)

(RM’Million)

25,979

477,68

3

24,46

647

6,52

6

29,069

536,02

9

27,45

153

2,27

5

32,689

597,82

1

31,20

059

3,45

1

37,991

646,69

8

36,65

764

0,20

7

40,9

3369

6,11

3

38,2

4368

8,29

5

total Income

total Assets

Net Income

Return on Investment

Dividend Credited Into Members’ Account

Total Members’ Fund

Five-Year Financial HigHligHts

2011

2011

2011

2011

2011

2011

2012

2012

2012

2012

2012

2012

2013

2013

2013

2013

2013

2013

2014

2014

2014

2014

2014

2014

2015

2015

2015

2015

2015

2015

25,08

46.58

28,20

96.87

31,462

6.97

36,815

7.25

39,

687

7.48



TheEPFreceivesCleanAuditCertificateforFinancialAuditingfromtheNationalAuditDepartmentforthefinancialyearended31December2014

TheEPFPortfolioManagersAnnualAwardDinner2015

InternationalSocialSecurityConference2015

VisitbyofficersfromtheMalaysianEmployersFederation(MEF)

EPFManagementConference

MARch

APRIL

MAy

19

25

20

28

28

InterviewwithAstroAwanionEPFretirementinitiatives

MediaBriefingonEnhancementInitiativesofEPFScheme

BriefingtoMTUConEnhancementInitiativesofEPFScheme

coRPoRAtE dIARy 2015

12

08

20

epf HeadquartersFamilyDay

11

VisitbyofficersfromPTAsabriIndonesia09

MeetingbetweenEPF’sManagementandtheMalaysianTradesUnionCongress(MTUC)

VisitfromtheNationalSocialSecurityFundofUganda

LaunchingoftheAcceleratedDevelopmentProgramme(ADP)

SigningCeremonybetweenEPFandGoodmanGroup

EPFServiceConference

MediaBriefingonEPFDividend2014

JANUARy

fEBRUARy

15

04

09

22 23

10

13

Lembaga Kumpulan Wang Simpanan PekerjaEmployees Provident Fund BoardCorporate diary 2015

EPFServiceAwards2014

VisitbyYBDatukJohariAbdulGhani,DeputyFinanceMinisterII toEPFHeadquarters

EPFparticipatesintheMerdekaparade

TownHallSessionwithCEO

32ndASEANSocialSecurityAssociationBoardMeeting2015

AUGUSt

SEPtEMBER

02

29

31

10 11

GLCOpenDay

VisitfromSocialSecurityOffice(SSO)Thailand

EPFPanelDoctorConference

VisitbyYBDatukChuaTeeYong,DeputyFinanceMinisterI toEPFPetalingJaya

NovEMBER

04

2025

26

VisitbyofficersfromtheInstitutefortheManagementofStateParticipations(IGEPE),Mozambique

03

07

EPF,KWASALandsignCorporateIntegrityPledge

dEcEMBER

0709

octoBER

VisitbyMalaysiaProductivityCorporation(MPC)withtheKenyaInstituteofManagement(KIM)

EPFRiskManagementSeminar2015

EPFGlobalPrivateEquitySummit2015

EPFCharityRide2015

SystemStarRating(SSR)2015

08

29

30

TheEPFcelebrates64th anniversary

01

EPFInvestmentSeminar2015

17

05

18

06

07


10

CHAIRMAN’S STATEMENT

“We ended the year with RM44.23 billion in total gross investment income

with a healthy gross return on investment

(ROI) of 7.48%.”

The year 2015 had been a remarkably eventfulyearfortheEmployeesProvidentFund(EPF).Alotofdevelopmenthadtakenplaceintheyearwhichshouldputusinmuchbettershapeforthefuture.Ourbusinessperformancewasmodestaswehadtooperate inaturbulenteconomy.WeendedtheyearwithRM44.23billionintotalgrossinvestmentincomewithahealthygrossreturnon investment(ROI)of7.48%.

In keeping with the changing aspirations ofour members, we too have evolved. We havesignificantly improvedouroperationalefficiencies,havingaddedarepertoireofe-servicestocatertothe diverse members demographics. Technologyhas also played a key role in EPF’s development,making the process of interacting and transactingwithusmuchsimplerandmorestreamlined.

GovERNANcE ANd INtEGRIty

Integral to our role as a statutorybody entrustedtoprotectandenhancevalueofourmembers’lifesavingsisgoodgovernanceandintegrity.Wehavedevotedtimeandefforttoreviewourgovernanceframework, which is built upon our core values- Customer Focused, Continuous Improvement,IntegrityandTeamwork.Thesearenotvaluesthatchangefromtimetotime,situationtosituationorpersontoperson,butrathertheyarethefoundationofEPF’sculture.Theyserveasafundamentalpartinhowwedobusinessandhelpsetclearparametersofwhatweexpectofouremployees’behaviourandcharacter.

To instil members’ confidence and trust in ourdecisions,wesetoursightsonthehigheststandardsof good corporate governance and we maintainintegrity in everythingwe do. InDecember 2015,the EPF signed the Corporate Integrity Pledge(CIP) witnessed by theMalaysian Anti-CorruptionCommissiontoaugmentourcommitmenttouphold

integrity, which is essential to create a successfulbusiness and transparent operating environmentthatadherestoglobalstandardsofgovernance.

Theyearalsosawusadoptingtheenvironmental,social and governance (ESG) principles in ourinvestment consideration and decision – thisshouldprovidestakeholdersan insighttothekindofqualityandthoughtprocessofourmanagement,corporatecultureandriskprofile.

SocIAL SEcURIty ANdENGAGING oUR StAKEhoLdERS

The changes in the socio-economic landscapehave multiplied manifold and we are constantlyvigilant for the latest relevant strategies in orderfor us to introduce initiatives that will addressissues revolving around ourmembers’ retirementwell-being.One such initiativewas theMembers’Consultationexercise,whichwasheldfollowingtheannouncementof fourenhancement initiatives tothecurrentEPFAct1991inApril2015.

tan Sri Samsudin osmanChairman




11


Itwas important that ourmembers participate indecisions that impact them before the proposalswere escalated to the Parliament for deliberationin November. That exercise requiredmembers tocasttheirvotesandprovidetheirfeedbackoverthefour proposed initiatives. The voting was opened

This period also saw us further enhancingengagement efforts with key stakeholders, wherebriefings and talks with Government, politicalpartiesfromallsides,relevantagencies,aswellasgroupsandassociations–privateandinstitutional.

SIMPLIfyING oUR oPERAtIoNS

The year 2015 had seen significant shifts in thewaywetransactwithourmembers.Wehavebeenable to simplify processes, while continuing toenhance and develop electronic services to driveouroperationalefficiencies,enablingustoextendreachandaccesstoourmembers.

Our i-Akaun facility has now become a gatewayto all our electronic services, namely e-Carumanfor employers to submit contribution details andmake payments online, and e-Pengeluaran formemberstosubmitwithdrawalapplicationsonline.We also launched the EPF Members InvestmentScheme(EPF-MIS)InformationPortaltoencouragemembers to conduct their own research on unittrust funds offered under the scheme. The portalshouldassistthemtochoosewiselybeforemakingthedecisiontotransferaportionoftheirsavingsinAccount1forinvestment.

IamalsoproudtoannouncethatwehaveopenedfivemoreRetirementAdvisoryService (RAS)unitsat our branches in Johor Bahru, Kuantan, Ipoh,KotaKinabaluandSeberangJaya.Thisisinadditionto the initial two branches in Kuala Lumpur andPetalingJaya.ThepositiveresponsesreceivedfrommemberswhohavesoughtadvicefromourhighlytrainedRASofficerswereindeedheartening,andIhavestrongfaiththatweareontherightpathtoensuringthatourmembersobtainthebestadvicefortheirretirementplanning.

Members’ Consultation Exercise

65%

25%

10%

21 to 40years old

41 to 50years old

Above 50years old

Demographics of the respondents

fortwoweeksanduponclosing,atotalof96,448EPF members had participated, making it thebiggestpublicconsultationof itskindeverheld inthecountry.

The most interesting discovery from the exercisewas the demographics of the respondents: morethan 65% of respondents were between 21 and40yearsold,25%werebetween41and50yearsold,andonly10%wereabove50yearsold.Thisisaclearindicatorthattheyoungergenerationistakingtheretirementissuemoreseriously,whichisaverypositivesignasthisisinlinewithouraspirationtomakeretirementayoungergeneration’sagenda.

Aboveall, themembers’consultationexercisehasgivenusafreshperspectiveonhowwecanbetterunderstandandmanagestakeholdersandmembers’opinions,needsandexpectations.Attheveryleast,the issueofsocialsecurityhasnowbecomeakeytopicofconversationandisbeingdebatedinbothclosedandopenforums.Thishas,andwillinmanyways,makeiteasierforgovernmentagenciesandorganisationssuchasourstopushforththesocialsecurityagendaatahigherlevel.

“Our i-Akaun facility has now become a gateway to all our electronic services, namely e-Caruman for employers to submit contribution

details and make payments online, while e-Pengeluaran are for members to submit withdrawal applications online.”




12

BUILdING coMPEtENcy

Significant growth and advancement have takenplace throughout 2015, and this momentum hasonlybeensustainedthroughtheeffortsofaunifiedworkforce who live and breathe the culture andvalues of the EPF.Much of the progressmade isdue to our team of self-motivated individuals forattainingandsustainingoperationalandcustomerdeliveryexcellence,andwhichhashelpedbuildtheEPFintoasustainableandglobalorganisationthatitistoday.

Continuouseffortstorecruittherightpeopleandtoupgradeskillsandefficiencyhasnotonlytranslatedinto high dividends, but has also earned us theawardforHRAsiaBestCompaniesToWorkFor inAsia2015.Wearebothdelightedandhumbledbythisaward;aspartofthemanagementandleadersintheEPF,wehavearesponsibilitytoestablishandmaintain an impeccable standard of excellenceaswell as play a key role as propagators of EPF’scorporatevalues.

The traditional ASK model - Attitude, Skills andKnowledge - a concept popular in the 1980s, isstill verymuch alive in the EPF as it continues tocontribute in shaping our growth and in buildingourcompetencyframework.Wehavebeengettingourstaffre-trainedandtheirskillsandknowledgeenhanced, while building and encouraging apositiveattitudetowardswork.Wehaverefreshedanddevelopednewprogrammestoensurethatourvaluesareinternalisedineveryaspectthroughouttheorganisation.

AchIEvING hIGh vALUE

Throughoutmy servicewith theEPF, Ihavecometo know and respect the EPF as an organisationcatalysed by a strong investment culture. As aretirementfund,thebulkofourinvestmentassetsareplaced in low risk yet sustainable instrumentswhichprovideastablestreamof incomeoverthelongterm.

The external environment in 2015 had been verydifficultanddoingbusinessbecameachallenge.Butdespitetheseheadwinds,wemanagedtogeneratea returnon investment (ROI)of7.48%.Guidedby

ourStrategicAssetAllocation(SAA)andcombinedwith our disciplined approach in investment, wewere able to generate RM44.23 billion in grossinvestment income,whichwas a 13.20% increasefrom2014.Ouroverseasinvestments,meanwhile,contributedabout48%ofourtotalgrossinvestmentincomefortheyearandhelpedtocushionusagainsttheweakerperformanceofdomesticassets.

We also made good progress in reinforcing ourpositionasanactiveinvestmentpartner.Leveragingonthebusiness relationshipsdevelopedoverseas,we have been encouraging foreign investment inMalaysia.Aprimeexamplewaswhenweventuredinto a logistics hub with the Goodman Group ofAustralia.

More importantly to our members is ourcommitment of delivering real dividend of noless than 2%over a three-year rolling period andnominal dividend of more than 2.5% on a yearlybasis.Thisyear,wedeclaredadividendof6.40%toour 14,550,355members, with a payout totallingRM38.24billion.

Dividends


We declared a dividend of 6.40% to our

14,550,355members with a payout totalling

RM38.24 billion




13

all the outgoing members for their contributionduringtheirtenurewiththeEPF.

MyheartfeltgratitudegoestoEPF’sChiefExecutiveOfficerDatukShahrilRidzaRidzuanforhisstrategicleadershipandcapabilitytosteertheorganisationon the right course as we aim to attain world-class standards.My sincereappreciationgoesoutto each and every one of ourmanagement teamand employees for their efforts, commitmentand dedication in making the EPF the respectedorganisationitistoday.

Thankyouallforyourparticipationandcontribution,without which we would not have achieved thesuccessesthatwehavetoday.Letuscontinueandkeepupthegoodworkandremaincommittedandsteadfast aswe strive to empower ourmembers’future.

tan Sri Samsudin osmanChairman

yEAR AhEAd

The global economy in 2016 may experienceslow and uneven recovery. It will be increasinglychallenging for us to manage our growing funds,but we will adjust our strategies accordingly sothatwecouldproject sustainable ifnotmoderategrowthinourfinancialperformance.

Nevertheless, we will not be disheartened. Ifanything,wewillbemoremotivatedtoworkharderto deliver on our promise. To make a differencetakestimeandrequiresnewthinkingsupportedbyacceleratedeffort.Ourroleasthecountry’slargestretirement fund and seventh largest in theworldshouldnottobetakenforgranted;wewillcontinuetoproposeandimplementinitiativeswhichwouldtakecareofthefutureelderlyaswellastheyoungergeneration.

“We will continue to simplify our processes and operations in an effort to improve service delivery, and keep leveraging on

technology by rolling out more easy-to-use electronic services.”

We will continue to simplify our processes andoperationsinanefforttoimproveservicedelivery,and keep leveraging on technology by rolling outmore easy-to-use electronic services. Against therapidchangeinmemberdemographics,insufficientretirement income and a complex social system,wehopetoshapeEPF’srolemoreprominentlyasaretirementfundbothinMalaysiaandglobally.

Building on the foundation of capable leadershipandpillaredbyastrongworkforce,Iamconfidentthatwehavewhatittakestomaintainahighlevelofoperationalandfinancialperformancewhichwillpositionuswellforfuturegrowth.

AcKNoWLEdGEMENtS

OnbehalfoftheBoard,Iwouldliketothankallourvarious stakeholders for their contribution whichhavepropelledustowherewearetoday.

We would like to acknowledge the support ofthe Government and its agencies, principally theMinistryofFinanceandBankNegaraMalaysia forcontinuing to engage us on matters of nationalinterestandhelpingustochampiontheretirementwell-beingofourmembers.

As Chairman, I would like to welcome our newlyappointedBoardandInvestmentPanelmemberstotheEPFandatthesametime,Iwouldliketothank





14

dIvIdENd RAtES

10

8

6

4

2

0

10

8

6

4

2

0

yEA

R

dIvIdENdRAtES(%)

1952

-195

9

1960

-196

2

1963

1964

1965

-196

7

1968

-197

0

1971

1972

-197

3

1976

-197

8

1979

1980

-198

2

1983

-198

7

1988

-199

4

1995

1996

1997

-199

8

1974

-197

5

2.50

4.00

5.00 5.25 5.50 5.75

5.80

5.85

7.00 7.25

8.00 8.

50

8.00

7.50 7.70

6.70

6.60

yEA

R

dIvIdENdRAtES(%)

6.84

6.00

5.00

4.25 4.50 4.75 5.00 5.15 5.

80

4.50

5.65 5.80 6.00 6.15 6.35 6.75

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

6.40

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