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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.
Annual Report 2015Lembaga Kumpulan Wang Simpanan PekerjaEmployees Provident Fund Board
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TheGuardianofRetirement-IntegrityandGovernance -LeadingtheWay-GivingValueBack-CheckandBalance
-TheFinancials-AdditionalResources
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)
6
Annual Report 2015Lembaga Kumpulan Wang Simpanan PekerjaEmployees Provident Fund Board
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(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
TheGuardianofRetirement-IntegrityandGovernance -LeadingtheWay-GivingValueBack-CheckandBalance
-TheFinancials-AdditionalResources
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
Annual Report 2015Lembaga Kumpulan Wang Simpanan PekerjaEmployees Provident Fund Board
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
TheGuardianofRetirement-IntegrityandGovernance -LeadingtheWay-GivingValueBack-CheckandBalance
-TheFinancials-AdditionalResources
Annual Report 2015Lembaga Kumpulan Wang Simpanan PekerjaEmployees Provident Fund Board
11
CHAIRMAN’S STATEMENT
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.”
TheGuardianofRetirement-IntegrityandGovernance -LeadingtheWay-GivingValueBack-CheckandBalance
-TheFinancials-AdditionalResources
Annual Report 2015Lembaga Kumpulan Wang Simpanan PekerjaEmployees Provident Fund Board
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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
CHAIRMAN’S STATEMENT
We declared a dividend of 6.40% to our
14,550,355members with a payout totalling
RM38.24 billion
TheGuardianofRetirement-IntegrityandGovernance -LeadingtheWay-GivingValueBack-CheckandBalance
-TheFinancials-AdditionalResources
Annual Report 2015Lembaga Kumpulan Wang Simpanan PekerjaEmployees Provident Fund Board
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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
CHAIRMAN’S STATEMENT
TheGuardianofRetirement-IntegrityandGovernance -LeadingtheWay-GivingValueBack-CheckandBalance
-TheFinancials-AdditionalResources
Annual Report 2015Lembaga Kumpulan Wang Simpanan PekerjaEmployees Provident Fund Board
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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