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Case Study on the Employee Provident Fund of Malaysia

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dc.contributor.authorWorld Bank Group
dc.date.accessioned2018-12-04T19:21:34Z
dc.date.available2018-12-04T19:21:34Z
dc.date.issued2018-06
dc.description.abstractThis paper documents the best practices and practical lessons learned from Malaysia’s largest mandatory public provident fund, the Employees Provident Fund (EPF). The objective of this paper is to increase the knowledge base of efficient pension funds for developing countries, drawing from Malaysia’s experiences. Findings include key critical factors that contributed to the successof the EPF, from a small pension fund set up in 1949, to become one of the largest pension fund among developing countries and the 15th largest in the world. This paper summarizes the EPF’s key strategies in corporate governance, investment, and operational strategies, as well as policies deployed by the EPF in managing its assets. The lessons from the EPF come from three main factors. Firstly, the EPF has developed a strong governance structure which discourages external politicalmeddling and encourages transparency and accountability. Secondly, the EPF’s investments strategy, guided by its Strategic Asset Allocation, including diversifying to foreign markets and new asset classes, has enabled the Fund to produce enhanced returns. Thirdly, the EPF’s operational effectiveness which is driven by the professionalism of their employees and their continuous improvement for members’ benefit. Nonetheless, several challenges remain in the present and in the future. The first challenge involves demographic changes as Malaysia is ageing more rapidlythan other countries and even now a sizable number of workers do not have the recommended minimum savings level needed for retirement. A revamp of the current model is needed to ensure that members will be financially independent post-retirement. The second challenge is lack of coverage: only half of those in the labour force are contributing to the EPF, which leaves the other half without oldage pension coverage. A reform agenda needs to expand coverage particularly for the self-employed. The final challenges are maintaining public trust and staying relevant, especially in the age of the fourth industrial revolution and the emerging gig economy that has different needs and demands. This case study will hopefully be of benefit to both policy makers andpractitioners, particularly in the developing world. It could help play an important part in designing a successful provident fund to contribute to a comprehensive social safety net for citizens.en
dc.identifierhttp://documents.worldbank.org/curated/en/197861540400101962/Case-Study-on-the-Employee-Provident-Fund-of-Malaysia
dc.identifier.doi10.1596/30938
dc.identifier.urihttps://hdl.handle.net/10986/30938
dc.languageEnglish
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesThe Malaysia Development Experience Series;
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo
dc.subjectPUBLIC PENSIONS
dc.subjectSOCIAL PROTECTION
dc.subjectPENSION FUNDS
dc.subjectGOVERNANCE
dc.subjectDISCLOSURE
dc.subjectCAPITAL MARKET
dc.subjectDEMOGRAPHICS
dc.titleCase Study on the Employee Provident Fund of Malaysiaen
dc.typeReporten
dc.typeRapportfr
dc.typeInformees
dspace.entity.typePublication
okr.crossref.titleCase Study on the Employee Provident Fund of Malaysia
okr.date.disclosure2018-10-24
okr.doctypeEconomic & Sector Work::Other Social Protection Study
okr.doctypeEconomic & Sector Work
okr.docurlhttp://documents.worldbank.org/curated/en/197861540400101962/Case-Study-on-the-Employee-Provident-Fund-of-Malaysia
okr.guid197861540400101962
okr.identifier.doi10.1596/30938
okr.identifier.externaldocumentum090224b0864f53c3_1_0
okr.identifier.internaldocumentum30544045
okr.identifier.report131289
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/197861540400101962/pdf/131289-WP-WorldBankReport-PUBLIC.pdfen
okr.region.administrativeEast Asia and Pacific
okr.region.countryMalaysia
okr.topicFinance and Financial Sector Development::Capital Markets and Capital Flows
okr.topicFinance and Financial Sector Development::Non Bank Financial Institutions
okr.topicSocial Protections and Labor::Pensions & Retirement Systems
okr.topicSocial Protections and Labor::Social Funds and Pensions
okr.topicPublic Sector Development::Public Investment Management
okr.unitFinance, Competitiveness and Innovation Global Practice
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