KUALA LUMPUR, June 3 — Contributors to the Employees Provident Fund (EPF) now have the option to switch from the existing savings scheme to one based on Islamic principles called Simpanan Syariah.

According to EPF CEO Datuk Shahril Ridza Ridzuan, the Syariah-compliant scheme will “outperform” conventional ones during poor economic times as they do not follow the conventional banking system.

However, there is a caveat. Shahril told The StarBizWeek in an interview published today that EPF members can only switch once and there will be no reversal once the decision is made.

“There will be no option to switch back and forth, and the reason for that is two-fold. First, it is in accordance with syariah principles that once the money becomes syariah-compliant, it cannot become conventional again; and the second pertains to administrative and system issues,” he was quoted as saying.

“So, we want to make sure that our members are very clear in their minds about what they want — whether they want their money to be managed under the existing conventional scheme or the new Syariah-compliant option.”

He added that the overall returns between the conventional and Syariah-compliant schemes is expected to be around less or more than 0.5 per cent or 50 basis points over 20 to 30 years.

But Shahril also pointed out that under Syariah principles, there were no guaranteed returns unlike the conventional scheme.

He also reportedly said that EPF will relaxed their approach for overseas investment as there were limited Syariah-compliant investment choices.

“As long as it is inherently Syariah-compliant and ethical, with possible good returns, we will look into it,” Shahril was quoted as saying. National news agency Bernama reported that Simpanan Syariah will be fully launched on January 2017.

It was reported that the initial fund size would be between RM100 billion and RM120 billion.