WorldPensionSummit

GLOBAL PENSION OUTLOOK: PRESENT AND FUTUREShahril Ridza RidzuanCEOEmployees Provident Fund Malaysia

Overview of EPF

Challenges of the future

Responding to the new environment

Established on 1st October 1951 | EPF ACT 1991.

National mandatory retirement savings scheme

Monthly contributions by employer and employee (20% @ 21%):

8% from employee salary 12% @ 13% from employer (Mar 2016 - Dec 2017)

Savings / Monthly contributionAccount 1 (70%) and Account 2 (30%).

EMPLOYEE’S CONTRIBUTION

EMPLOYER’S CONTRIBUTION DIVIDEND WITHDRAWALS RETIREMENT

SAVINGS

&

7th LARGEST sovereign pension fund in the world (USD 165 billion)

Key StatisticsAs at Dec 2016

AVERAGE SAVINGS

RM41,781

TOTAL MEMBERS14.81 mil

ACTIVE MEMBERS6.88 mil

6.26%

52.07%

29.47%

12.20%Gen Z (16-20)

Baby Boomers (>50)

Gen X (36-50)

Gen Y (21-35)

4.42%

41.30%

34.38%

19.90%

AVERAGE SAVINGS

RM75,308

67

Branches Staff

5,650TOTAL ASSET SIZE

RM731.1 bil @ USD165 bil

REGISTERED EMPLOYERS540,833

ACTIVE EMPLOYERS481,325

TOTAL CONTRIBUTIONSRM61.59 bil

TOTAL WITHDRAWALS

RM47.41 bil>

Account 1(70%: Retirement)

Account 2(30%: Pre-Retirement)

Increase savings for retirement Add value to members’ retirement

Members’ Investment Scheme (1996; rev. Feb. 2008)

Topping Up in Account 1 (July 2008)

Age 50 Years (1968) Housing (1977) Health (Critical Illness) (1994) Education (April 2000) ‘Hajj (2013)

Account 55(Upon reaching age 55 years)

Savings accumulated before age 55

Lump sum withdrawal Partial withdrawal Monthly withdrawal Combination of partial and monthly Annual Dividend Withdrawal

New contributions from age 55 - 60

Account Emas(Upon reaching age 60 years)

Can only be withdrawn at age 60 years Same withdrawal payment options with Account 55

Death Withdrawal (1952) Incapacitation Withdrawal (1952) Leaving Country Withdrawal (1952) Pensionable Employees Withdrawal (July 2000) Optional Retirement Withdrawal (2001)

OTHER WITHDRAWALS (ALL SAVINGS) Death Assistance (1977)

Total: RM2,500 Incapacitation Assistance (1986)

Total: RM5,000

ASSISTANCE (Defined Benefit)

OVERALL VIEW of the EPF Scheme

Future 2030 underpinned by two megatrends

DEMOGRAPHIC CHANGES Technology

15% - 20%people aged above 60

80% - 85%will be in urban centres

11% - 12%youth unemployment

80% automated occupations

Digitization30 billion connected devices

Artificial Intelligence

80% costs savings removing intermediaries

Additive Manufacturing

Economic and citizen well-being will be affected

ANTICIPATED Scenarios in Malaysia

Overview of EPF

Challenges of the future

Responding to the new environment

KEY CHALLENGES for Malaysian workers and citizens

ANTICIPATED Scenarios in Malaysia

GROWING inequalityTotal EPF savings of top 1.7% EPF members ARE MORE than the entire savings of bottom 57% members(Source: UNDP)

146 : 100Household debt-to-income ratios, HIGHER THAN developed countries(Source: UNDP)

31% global workforce are FREELANCING(Source: Freelancer.com)

Large UNCOVERED population

3 in 5 Malaysian population LACK OF PROPER SOCIAL PROTECTION(Source: MOHR/JPA/EPF)

UNSUSTAINABLE pensions

Doubled in 15 years(2015 - 2030)

RM19 bil to RM33 bil*(Source: KWAP/MOF)

2 in 3 EPF members do not achieve the BASIC SAVINGS QUANTUM(Source: EPF)

INCREASING household debt

RISING gig economy

INADEQUATE savings

How do we address 22 MILLION ADULT MALAYSIANS

Depending only on personal savings(Uncovered and under-covered)

NO formal social protection programme

13.7 MILLIONSelf-employed and outside labour force

Inadequate monthly pensions(under-covered)

RM2.1k average monthly pension

1.7 MILLIONCivil servants (including pensioners)

Unsustainable pension system design

Inadequate monthly pensions (under-covered)

33% of active members achieve Basic Savings

6.8 MILLIONPrivate Sector(EPF Active Members and small portion of active self-employed)

Unsustainable income replacement for individuals

Malaysians’ use of INTERNET AND MOBILE DEVICES

3

Overview of EPF

Challenges of the future

Responding to the new environment

FINANCIAL SECURITY

Adequate and sustainable income to live and retire comfortably

HEALTHY

Live a healthy life and have access to good medical and nursing facilities

HAPPY & MEANINGFUL LIFE

Financially and physically healthy leads to good mental health and meaningful life

Holistic approach towards a better future – BROADER Scope

FORWARD POSITIONING - Helping members to achieve a better future

The way we ENGAGE with customers needs to CHANGE

TRANSACTIONAL ADVISORY

PROCESS BASED STRUCTURE CUSTOMER CENTRIC APPROACH

REACTION ENGAGEMENT PROACTIVE ENGAGEMENT

TRADITIONAL ADVERTISING MARKETING MINDSET

CURRENT FUTURE

ENFORCEMENT EMPLOYER SERVICES

PHYSICAL & MULTIPLE CHANNEL OMNI CHANNEL

Leveraging technology in service delivery

Transforming EPF into a DIGITAL ORGANISATION14

Manual Online

e-Contributions e-Withdrawals i-akaun

99%

Contributions transactions performed ONLINE

increased take up rate for ONLINE WITHDRAWAL

50%

increased in usage of self-service ONLINE ACCOUNT

23%

DIGITAL HUB for employers and employees

15

EMPLOYER MEMBER

16