Greater transparency sought from TAP
The Employees Trust Fund (Tabung Amanah Pekerja or TAP) should exercise greater transparency in the way it conducts business to assure contributors their money is safe, said some financial planners and business executives.Contributors have the right to know the details on TAP's investments and retention policy because these affect their retirement fund, said one financial planner who is familiar with the pension fund concept.
TAP also owes it to contributors to disclose their operations cost to prevent speculations that monthly contributions are being used to pay for the salaries of the fund's employees, he said.An executive from an information technology (IT) firm said that TAP's transparency on its investments are also important so the public will understand the reasons for any drop or non-distribution of dividends.
A TAP representative, requesting not to be named, said: "We have been holding financial roadshows and basically, we have been sharing with our contributors in terms of where we invest our money."During a roadshow TAP executives usually talk to the public about their "fundamental rules".
"What happens is we tell them where we invest their money, which include fixed deposits, bonds, equities and real estate to name a few," said the TAP representative.Another financial planner said most people think they should have a retention policy, which includes how much they make and disclose it, so when everything is stated, the public will know how much will be re-distributed.
"There could be a (TAP) retention policy for all we know, but they have never mentioned one, so how would the public know about it?" he asked.He said TAP's investments are "rather unknown" because nothing specific has ever been disclosed.Another matter is how TAP does not disclose their operations costs.
"Every business has operating costs involved but, they should not get carried away with the idea of creating jobs as their salaries are based on returns of investment," he said, suggesting that TAP should disclose their costs and should work within the limit so that contributors don't end up paying for their salaries.
A business executive, who wished not to be named, agreed that the pension fund should be more transparent."The fact that it (dividends) is not pro-rated is a problem for some, which underlines why they need to be clear-cut about the investments that they participate in," he said.
Contributors are taking risks with TAP by allowing it to invest their money, but when it makes losses people don't get dividends and when profits are reaped, people don't get extra dividends, the financial planner said."They are declaring no dividends, claiming the financial crisis, but during an economic boom, how much they made through investments (is not known to the) public.
During the economic boom, dividends were not significantly increased," he said."If they don't have a policy in terms of what they are going to invest, at the end of the day it will be chaotic because everyone's retirement funds are in their hands," the business executive said.The TAP representative said that the funds will still be intact even though there are no dividends for the fiscal years 2008 and 2009.
"Decrease in returns is basically due to the global financial crisis experienced by everyone. It's not a normal crisis, but faced by all global enterprises," the official said, adding that on their website they have the rate of dividends that were increased since the trust fund's inception in 1993.
He said data shows a growth of dividends over the years and there are no fixed dividends. In 1993 it was 1.5 per cent and it increased to 4.25 per cent in 2007/8."What happens next year depends on the performance of markets, it could be higher or lower than the previous dividends.
We won't know," said the TAP representative.The financial planner added that the representation of the annual statement shows that contributors are not getting dividends from monthly contributions but only from the previous year."Representation of the statement is unclear, we are contributing monthly and even if we were getting dividends, the statement does not show," he explained.
TAP encourages anyone who has questions about the statements to approach their counters, where staff will be more than willing to help.
During TAP's appreciation night 2009 on October 3, the Minister of Energy at the Prime Minister's Office, in his capacity as the chairman of the TAP Board, said that they made the decision to not issue any dividends after taking into account the financial crisis and the global recession which have affected the performance of the fund's investments.
"The decline in investment performance for the fiscal year 2008/9 is considered out of the ordinary because all investment assets have seen a decrease due to the financial crisis," said Pehin Orang Kaya Seri Dewa Major General (Rtd) Dato Seri Pahlawan Hj Mohammad Hj Daud. He added that financial institutions all over the world were also experiencing the same situation.
Pehin Dato Hj Mohammad said that as of April this year, the performance on investments has done better as the global economy recovers from the financial crisis. (The Brunei Times)