The statutory body that manages the pension scheme for civil servants is working on expanding its fund size from RM159 billion currently to RM200 billion by 2025.
Under its newly launched three-year roadmap – the Teras 5 – KWAP also plans to increase private equity interests and international investments.
CEO Nik Amlizan Mohamed said the fund size had reached RM159 billion at the end of 2021 despite it being a year full of unprecedented volatility.
“Despite the challenges, we were able to achieve a historically high net income of RM10 billion,” she said at the launch of Teras 5 by minister of finance Tengku Zafrul Aziz today.
Tengku Zafrul expressed satisfaction that KWAP has been able to achieve a record fund size despite the challenges.
The three-year Teras 5 roadmap is expected to help propel KWAP’s investments covering a series of different asset classes across the globe through diversification, Amlizan said.
“Moving forward, our focus will be very much in the private market,” she said. “We want to see the share of private equity in our fund rise from 10% currently to 20% by 2025.”
Apart from that, KWAP will also focus on infrastructure and property, areas that Amlizan said were experiencing “double-digit growth”.
She said KWAP also hopes to expand its investments abroad. Currently overseas investments account for 20% of the fund’s portfolio, with the remaining 80% being domestic investments.
KWAP targets to raise the proportion of its overseas investments to 30% in the next three years.
Amlizan said KWAP has also set a target of 7% return on its investments by 2025, from the 6% that has been achieved over the past decade.
“What we have right now is a foundation that supports a 6% per annum (growth), but if we want to achieve 7% we need to make sure that our foundation is a lot stronger, moving forward,” she said.
Among the key improvements proposed under Teras 5 is a change in its organisational structure to elevate the strategy, finance and digital functions to allow for a more holistic approach to KWAP’s growth plans.
Amlizan said these functions are expected to drive key deliverables such as the implementation of customer experience strategies, particularly via digital platforms, to improve services to pensioners.
The three-year Teras 5 programme is based on elevating five enablers, namely structure, governance, people, processes and digital.
The five enablers are expected to drive eight work-streams, including organisational structure, enterprise, investment, contribution and retirement services, digital, people and culture, corporate services as well as risk, governance and oversight.
The eight work-streams have been tasked to drive the implementation of 44 initiatives, which include key initiatives on realignment of front, middle and back offices, organisational restructuring towards a value chain-based structure and refinement of a group-wide governance framework.