EPF To Base Future Investments On Strategic Asset Allocation – CEO

SHAH ALAM, March 1 (Bernama) -- The Employees Provident Fund’s (EPF) future investments will be guided by its Strategic Asset Allocation (SAA), which follows a three-year investment cycle and is reviewed every three years.  

Chief executive officer Ahmad Zulqarnain Onn said the EPF has reviewed its SAA for 2024, setting its investment strategy for 2025, 2026 and 2027.  

He said the asset allocation, approved by the investment panel and the Ministry of Finance, will maintain the current balance between domestic and global investments.  

“There will be no change, no reduction. The aim is to keep it stable over the next three years.  

“In mathematical terms, this means that 70–80 per cent of new money (contributions from foreign workers) will be deployed domestically. The risk profiles of domestic and global investments are quite different,” he said at a press conference following the EPF 2024 Dividend Briefing here today.  Ahmad Zulqarnain said the EPF’s global portfolio would have a higher allocation to risk assets such as equities.

“The total funds from foreign workers are not yet known. However, based on our current estimates, it will not exceed RM5 billion in the first year, based on the two per cent employer and two per cent employee contributions announced by the Prime Minister (Datuk Seri Anwar Ibrahim),” he said in response to a question on how foreign workers’ contributions would be invested.  

He said the EPF would also step up efforts to improve contribution coverage, as only 60 per cent of Malaysian employees are currently covered, while the rest either remain uncovered or do not contribute.  

With only 37 per cent of Malaysians having adequate savings, he said the EPF must shift away from the lump-sum withdrawal model. 

“Because even if you have enough, as life expectancy rises, you may eventually not have enough savings to sustain you.  

“And that is a real risk. With advances in healthcare and anticipated breakthroughs in drug discovery, particularly driven by artificial intelligence (AI), society may live longer than expected.  

“So we have to consider how we can provide protection against longevity risk for society,” he said.  

Outlining the EPF’s investment outlook for 2025, Ahmad Zulqarnain said the fund is focusing on trends with multi-year tailwinds, including healthcare, AI and data, energy, and private markets.  

“As societies age worldwide, including in Malaysia, demand for healthcare will continue to increase year after year.  

“We are also seeing strong growth in AI and data. The digitisation of economies will persist, and generative AI will drive further demand for data and digital assets,” he said.  

He added that energy is another sector undergoing a multi-year shift towards e-energy.  

Despite developments in the United States, he said Malaysia remains confident that the transition to cleaner energy will continue.  

“It may slow down slightly due to political factors, but it will continue unabated because the cost structures of clean energy are expected to decline faster than those of fossil fuels.  

“Finally, we will continue allocating to private markets, which have been strong income contributors and provide relatively stable returns on a risk-adjusted basis.  

“I believe this will be further supported domestically by the various economic modernisation plans that have been well received by the investment community over the past two years,” added Ahmad Zulqarnain.  

-- BERNAMA