Lembaga Tabung Angkatan Tentera’s (LTAT) negative reserve balance issue represents only one of the three components of the combined reserve that will not affect the financial stability of the pension fund.
LTAT in a statement today (Mac 8) said the negative reserves raised in the Auditor General’s Report for Federal Agencies 2022, on Wednesday, only involved the item under Other Comprehensive Income Reserves (OCI).
In addition to the OCI Reserve, the pension fund said, LTAT has two other combined reserves involving Retained Profits and Reserve Funds which reflect LTAT’s financial stability.
“The Reserve Fund continues to remain unchanged and is set at a rate of two percent of the contributor’s account balance, thus providing the basis for financial stability.
“The OCI reserve is made up of unrealised accumulated gains or losses of assets labelled according to accounting standards as FVTOCI (Fair Value of Other Comprehensive Income), reflecting fluctuations in the market and asset performance.
“Thus, even though the OCI Reserve shows a deficit value, the net balance of the combined reserve at the end of Financial Year 2022 is positive amounting to RM160 million, an increase from the previous year,” said LTAT.
According to LTAT, the unaudited post-dividend combined reserves for Financial Year 2023 will also show an increase reflecting LTAT’s commitment to its transformation journey towards strengthening its financial position.
“This positive Net Reserve Position leads to a Book Solvency Ratio exceeding 100 percent, confirming that Net Assets at Book Value exceed the amount of contributors’ contributions.
“This indicates the ability of LTAT to give dividends to all contributors,” he said.
Regarding the issue of Non-Cash Profits that contribute to the income for Financial Year 2022, LTAT explained that if this component of Non-Cash Profits is separated, LTAT can still maintain a solvency rate not less than the minimum threshold level (threshold) as stipulated in the Dividend Policy.
“As a retirement fund, the declared dividend does not involve direct cash withdrawals and will only be credited to the member’s contribution account.
“Thus, LTAT’s liquidity position remains stable, ensuring that we can meet all commitments when required. LTAT remains committed to transparency, accountability and the well-being of contributors and beneficiaries.,” it said, adding, they will continue to strive to achieve the highest standards of governance, governance and financial management to safeguard the interests of all stakeholders.
“In this regard, LTAT will liaise with relevant stakeholders to address any queries or issues related to reserves and or other matters related to the sustainability of the fund,” it said.
LTAT reserves are subject to close supervision and managed according to regulatory requirements under the Armed Forces Fund Act 1973 (Act 101), the fund explained and said: “LTAT assures the public that its financial position remains strong and able to meet all its obligations.
Yesterday, the National Accounts Committee (PAC) informed that it will call the management of LTAT to investigate the issue of the reserves remaining negative after the disclosure of the Auditor General’s Report (LKAN), on Wednesday.
Its chairman, Datuk Mas Ermieyati Samsudin reportedly said, PAC also did not rule out the possibility of calling the defense minister in the proceedings which were scheduled after the Aidilfitri celebration.
