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Electronic Unit Trust Investment Withdrawal (E-PPA)
Employment Provident Fund
Malaysia

The Problem

EPF aspires to be a world-class social security organisation providing the best retirement savings for Malaysians. In order to deliver effective and efficient services to its 12 million members, EPF continuously improves its services platform to enhance its member satisfaction level.
One of the withdrawal schemes offered to its members is the Member’s Savings Unit Trust Investment Withdrawal. This withdrawal scheme allows members to withdraw and invest part of their savings (Account 1) in Unit Trusts through external Fund Managers appointed by the Ministry of Finance or Trust Fund Management Institutions (TFD).
As with all manual processing, high operational cost has always been the challenge. EPF faced increasing cost escalation with the increasing number of Investment Withdrawals through manual processes.
Apart from the high operational cost, EPF also had to deal with human errors resulting from a high volume of manual processing. More time and effort will be required to rectify these problems when volume increases and this may potentially result in financial loss due to staff oversight. On top of this, existing Trust Fund Management Institutions faced delays in funding as transactions would on average; take 7-14 working days for manual processing before payment could be made. With e-PPA, Unit Trust Fund Management Institutions are paid within T+1 day (92%) and for those applications with exception handlings within T+5 (8%). At the same time members will only be credited around 14 working days for redemption of unit trust investments for manual process and now after the implementation of this innovation within T+2 days (e-PPA).

Solution and Key Benefits

 What is the initiative about? (the solution)
The e-PPA (Electronic Unit Trust Investment Withdrawal) project started on October 2008 and was implemented in January 2010 with participation from a few Unit Trust Fund Management Institutions. The e-PPA project allows the processing of the Member’s Savings Unit Trust Investment Withdrawal applications to be done fully electronically by the Trust Fund Management Institutions with a high degree of automation, unlike before where the applications had to be submitted manually. Its objectives are to speed up the turnaround time of the Member’s Savings Unit Trust Investment Withdrawal and payment to the Trust Fund Management Institutionst,to reduce the error rates due to manual processing, to speed up the “reinstatement to members’ account” process when members decided to redeem their investments, to reduce the operating costs of EPF. Since implementation of this innovation (from January 2010), tremendous results have been achieved.Turnaround time reduced from 7-14 days to 1-5 days where error rates reduced from 2% to 0.01%. Prompt payment via electronic mode and number of supporting staff reduced from 36 to 1. Managed a sudden increase in applications i.e. the surge of 76% applications compared to year 2009.

Actors and Stakeholders

 Who proposed the solution, who implemented it and who were the stakeholders?
This project was mooted by Mr. Tamilwanan (the previous Head of Withdrawal Department) based on conceptual idea for Critical Illness Withdrawal. The e-PPA project is a top-down initiative and is fully supported by the top management of EPF. This initiative was approved by the SERVE Project Steering Committee No. 1/2008, a project to revamp all core modules and system in EPF and approved by the EPF Board on 11 March 2008.

EPF collaborated with FIMM (Federation of Investment Managers Malaysia) and all their affiliated members. They were jointly accountable and were committed to the success of the Project with their 3rd Party Administrator, REXIT. REXIT acts as a single point of contact for EPF to deal with the Trust Fund Management Institutions for the day to day processing of applications.

(a) Strategies

 Describe how and when the initiative was implemented by answering these questions
 a.      What were the strategies used to implement the initiative? In no more than 500 words, provide a summary of the main objectives and strategies of the initiative, how they were established and by whom.
The objectives of this initiative are:-
1. To speed up the turnaround time of the Member’s Savings Unit Trust Investment Withdrawal and payment to the Trust Fund Management Institutions
2. To reduce the error rates due to manual processing
3. To speed up the “reinstatement to members’ account” process when members decided to redeem their investments
4. To reduce the operating costs of EPF.

The strategic development and implementation of this initiative involved not only internal EPF system enhancement but integration with other third parties from the submission of applications, withdrawal of fund from EPF until the fund is credited into the Unit Trust Fund Management Institutions accounts electronically. The strategies of this initiative are then translated and transformed into the following technical requirements.
EPF End Enhancement
1) To provide electronic means for Trust Fund Management Institutions to enquire on member's eligibility to withdraw under the intended withdrawal type via the appointed administrator.
2) To receive and process electronic withdrawal applications from the appointed administrator and route for system workflow, whenever necessary. Such electronic applications must be paired with appropriate thumbprint minutiae, scanned images of the relevant documents and the electronic data directly converted from application form.
3) To issue electronic payment to individual Trust Fund Management Institutions via RHBI and supplement with electronic payment listing detailing every withdrawal application paid.
4) To receive electronic funding from the Trust Fund Management Institutions via RHBI; and
5) To process electronic Group Reinstatement (Redemption/cancellation of the withdrawal(s) made earlier, and reinstate the monies back into member's EPF account.
6) To produce reports and notices to support the above functionalities

Trust Fund Management Institutions End Requirement
1) To match member’s name from EPF with applicant’s information and to perform pre-eligibility check.
2) To conform to valid EPF parameter values whenever codes are given in interface file.
3) To crop fingerprint scanned with 500dpi resolution and subject to testing by EPF.
4) To compress CIJ image with WSQ format using by AFIS DLL API and subject to EPF testing.
5) To scan Images with 200dpi resolution and subject to testing.
6) To ensure the metadata entries are paired with the correct images and linked to the correct application and quality standards.
7) To have a lease line between Third-Party Administrator (REXIT) to EPF Data Centre.
8) To reconcile payment status.
9) To allow auto debit from Trust Fund Management Institutions account in RHBI for any reinstatement of members’ investment into EPF Account.
10) To conform and submit member reinstatement detail electronically to RHBI.
11) To produce reports and notices to support the above functionalities.

(b) Implementation

 b.      What were the key development and implementation steps and the chronology? No more than 500 words
The key development and implementation steps and chronology are as follows:

Phase 1: User Requirement
Dates: 1/6/2009 – 30/6/2009
Objectives met: All user requirements from both EPF and FiMM finalised and documented.


Phase 2: Application Development & Enhancement
Dates: 1/7/2009 – 31/7/2009
Objectives met: All development and enhancement done based on the signed-off user requirements.

Phase 3: Testing (System Integration Test)
Dates: 3/8/2009 – 11/9/2009
Objectives met: All file formats tested.

Phase 4: Testing (User Acceptance Test)
Dates: 1/9/2009 – 20/11/2009
Objectives met: Completed 2 cycles of UAT.

Phase 5: User Integration Manual
Dates: 26/10/2009 – 20/11/2009
Objectives met: User Integration Manual documented based on EPF standard.

Phase 6: Operation Manual Development
Dates: 26/10/2009 – 20/11/2009
Objectives met: Operations Manual documented based on EPF standard.

Phase 7: Training
Dates: 23/11/2009 – 4/12/2009
Objectives met: Training done for users from IT Department and Withdrawal Department.

Completion:
Pilot Launch: 14/12/2009 Actual Launch: 11/1/2010
Objectives met: Fully Launched as scheduled with participation from a few Unit Trust Fund Management Institutions. Currently 33 Unit Trust Fund Management Institutions are participating in this initiative.

(c) Overcoming Obstacles

 c.      What were the main obstacles encountered? How were they overcome? No more than 500 words
Problems Encountered
1) Network inefficiency
2) Related enhancement to Core System
3) Lack of Monitoring
4) Error in system that led to undesired results
5) Trust Fund Management Institutions failed to understand the actual requirement hence requested last minute changes.
6) National Registry Department denied EPF request to implement pre authentication at submission stage at Trust Fund Management Institutions.

Solutions
1) IT monitors closely and rectifies promptly any system issues as it affects Trust Fund Management Institutions’ operations.
2) Study any implication to the system if change made to other withdrawal modules.
3) Install system to monitor performance of Server and have alert system.
4) Important to understand the whole system and processes involved.
5) Strive to meet all deliverables with high level of commitment.
6) Transparent, highlight implication and without procrastination.
7) Anticipate and mitigate any risk at the early stage of the project. Open discussion and weigh pros/cons to the business- win-win outcome.

(d) Use of Resources

 d.      What resources were used for the initiative and what were its key benefits? In no more than 500 words, specify what were the financial, technical and human resources’ costs associated with this initiative. Describe how resources were mobilized
Since this is collaboration with FIMM, the cost associated with this initiative was borne by FIMM. EPF only paid for the integration and internal enhancement to its systems. EPF set-up a Project Steering Committee (PSC) and a Project Working Committee (PWC) to implement this initiative. Human resources were deployed from various departments in EPF to work on this initiative.

Sustainability and Transferability

  Is the initiative sustainable and transferable?
e-PPA is sustainable, easy to adapt for other work process based systems and can be used for other similar work processes. This innovation is environmental friendly and reduces paper usage. Unit Trust companies are using the e-PPA system effectively and efficiently and it is a great help to cope with the rapid increase in investment withdrawal applications. Improvement is done from time to time to enhance the e-PPA process and system. The success of this innovation has given EPF more impetus to implement more e-services for our stakeholders and customers. We have been focusing on similar type of innovations and improvements to enhance our services to the 12.5 million members and more than 400,000 employers. Since then EPF have implemented the Hassle Free Withdrawal Process for the 50 year and 55 year withdrawal schemes and Millionaire Withdrawal Scheme and is now embarking on converting our manual withdrawal submission to online and approval notices from snail mail to Short Messages Service (SMS).

Lessons Learned

 What are the impact of your initiative and the lessons learned?
Most Unit Trust Companies are using the e-PPA system effectively and efficiently and it is a great help to cope with the rapid increase in investment withdrawal application.

The key elements that made this initiative/innovation a success were:

1) Close collaboration, commitment and team work among team members at EPF and other organisations.
2) Effective project management, especially project risk.
3) Strong commitment and support from Top Management.

Lessons Learned are:
1) On Scope and Work Processes – important to understand the whole system and processes involved.
2) Deliverables/Quality – strive to meet all deliverables with high level of commitment.
3) Timeline – overcome obstacles to ensure milestones achieved as targeted.
4) Effort – team effort-operation, technical, vendor and user.
5) Training/Skill Development – hands on and able to troubleshoot error/problem.
6) Communications – transparent, highlight implication and without procrastination.
7) Issues/Remaining – anticipate and mitigate any risk at the early stage of the project; open discussion and weigh pros and cons to ensure win-win situation.


e-PPA had bagged EPF both the IDC-Enterprise Innovation Awards 2010 and the Best Process Innovation Award in the Share Guide Association of Malaysia (SGAM) ICT Awards 2010. SGAM is an IT users Group and a nonprofit whose member organisations are primarily users of technology and IT services. These awards were given in recognition to EPF for achieving IT and Business Excellence in Malaysia, underlining its commitment to enhance service delivery through technology.

Since the implementation of e-PPA, EPF has seen tremendous achievements in terms of process efficiencies; operational cost savings, faster approval turnaround time and improved payment period. Initial development cost could be recouped within 15 months; however a significant saving is expected from year 2 onward as the saving is 40%-50%.

Contact Information

Institution Name:   Employment Provident Fund
Institution Type:   Government Agency  
Contact Person:   Ibrahim Taib
Title:   Mr  
Telephone/ Fax:   03-2616 6300
Institution's / Project's Website:   www.kwsp.gov.my
E-mail:   ahatta@epf.gov.my  
Address:   25th Floor, EPF Building, Jalan Raja Laut
Postal Code:   50350
City:   Kuala Lumpur
State/Province:   Federal Territory Kuala Lumpur
Country:   Malaysia

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