MGF2243 - QUIZ 3

Wahid has estimated that he would need an additional RM700,000 by the time he retires in 23 years' time, in addition to his Employees Provident Fund (EPF). The assumed pre-retirement weighted average rate of return on his investments is 6% per annum. Assume also that the pre-retirement inflation rate is 3%. If Wahid wants to start investing immediately for his retirement, how much should his regular annual investments (to the nearest ringgit) be?

• RM14,052

• RM21,179

• RM53,674

• RM40,990

A private sector employee needs to contribute to the EPF for all the following payments received, EXCEPT:

• directors' fees

• commissions

• allowances

• bonuses

Maher, 46, is an EPF member. He currently has RM175,000 in Account 1 and RM55,000 in Account 2. Ten years ago, he bought a house in Kepong for RM350,000 with a 25-year housing loan of RM200,000. The current balance of the housing loan is RM85,000. If Maher wishes to reduce his housing loan, what is the maximum amount he can withdraw from his EPF savings and from which account?

• A maximum of RM85,000 from Account 1

• A maximum of RM85,000 from Account 2

• A maximum of RM85,000 from a combination of Accounts 1 and 2

• None of the above

Edward has a wife and two children. He wishes to leave RM200,000 to each of them when he reaches the age of 85. Which of the following methods is the most suitable for calculating his required retirement funding?

• Capital preservation method

• Capital liquidation method

• Perpetuity method

• All of the above

Which of the following statements is TRUE?

• The minimum dividends payable by Private Retirement Schemes (PRS) is 2.5%

• Members of the EPF are not allowed to switch between conventional and Shariah schemes as they like

• Individuals who withdraw funds from the EPF before age 55 are subjected to a penalty fee of 5%

• None of the above

What is the aim of retirement planning?

• To acquire financial planning knowledge

• To determine the level of income needed during retirement

• To provide social security during working life

• To ensure our assets are transferred to our loved ones

There are two (2) accounts available for members of the Employees Provident Fund

(EPF). Which of the following is the purpose of withdrawal from Account 1?

• To buy a residential house

• To invest in a local unit trust scheme

• To finance your higher education

• To cover medical expenses

Which of the statement is TRUE about the Employees Provident Fund (EPF)?

• EPF is a voluntary short-term savings and investment scheme designed to help

  people save more for retirement.

• EPF does not provide retirement benefits for members by managing the member’s

  savings

• Deduction of EPF includes salary, maternity leave, allowances, commissions, and

  arrears of wages.

• Account 1 is allowed to withdraw if the EPF members leave the country or die

The major financial benefit of beginning your retirement funding early is related to

• increased cost of living.

• compound interest.

• reduced anxiety.

• inflation.

The biggest unknown factor that retirees have when estimating their retirement

needs and income is:

• social security.

• inflation.

• pension benefits.

• retirement age