EPF : Service Charges Capped at 3%

Posted in Malaysia Investment, Malaysia Mutual Fund & Unit Trust, Malaysia Personal Finance, Malaysia Retirement |

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Members of the Employees Provident Fund (EPF) will pay 50 per cent less in service charges for investment in unit trusts from January 1, 2008. The EPF announced that the service charges would be capped at three per cent, and fund management institutions cannot impose service charges beyond that.

This move as approved by the Minister of Finance will help members save on service charges. The service charges by local investment funds in Malaysia currently are relatively higher when compared with other countries like Singapore, United Kingdom, Japan and the United States.

тАЬMembers can enjoy better returns from their investment in unit trusts with the lower service charges,тА? said Datuk Azlan Zainol, Chief Executive Officer of the EPF.

Datuk Azlan also added, тАЬWe decided to cap the service charges at three per cent in the interest of our members and the fund managersтА?.

Currently members pay about five to six per cent in service charges.

тАЬA study commissioned recently by EPF revealed that one of the major factors affecting the investment returns for our members is the high service charges imposed by the fund management institutions,тА? said Datuk Azlan.

How would the private fund management companies response to this initiative by KWSP?

Well, first of all, if initial service charges (ISC) for cash investment still maintains at 5-7 percent, such a move will definitely attract more EPF investment from the public, since everyone, almost everyone, likes a discount.

Also, with a double-standard such as this, what is the justification that cash investors are not allowed lowered ISC?

One major difference between EPF investment and cash investment is that the returns made from EPF investment is not withdrawable as cash, while with cash investment, you can withdraw the cash proceeds from the investment anytime you like.

I see this as a welcoming move, as long as the private fund management companies do not impose any double-standard policies on EPF investors, such as limiting investment from EPF to certain funds only.

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arthrospira 9 months ago 1 point
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i think whatever method that reduces the cost of buying/owning any mutual funds is most welcome, because it may help investors to gain profit faster depending on the chosen funds... at the end of the day it the depends also on the investors ability to research & buy the suitable funds...

the more interesting question is why EPF reduces/restrict the number of funds that its member can purchase??? because some of the most profitable/best performing funds fall into the restricted categories... especially if you're only able to invest in the syariah-compliant funds like me...

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