KUALA LUMPUR: The Armed Forces Fund Board (LTAT) has allayed any concerns about its financial position, stressing that it remains robust and capable of fulfilling its obligations.
LTAT also noted that its reserves are subject to rigorous oversight and are managed in accordance with regulatory requirements under its governing act.
"We wish to clarify that the negative reserve of LTAT duly highlighted, is the other comprehensive income (OCI) reserve, which is just one facet of the combined reserve.
"LTAT's combined reserve is composed of three components, namely, retained earnings, reserve fund, and OCI reserve, which, in combination reflects our financial stability," it said in a statement today.
The statement follows the disclosure of the Auditor-General's Report that showed the fund's reserves were in the negative of RM376 million in 2020 and RM258 million in 2021. In 2022, the figure was a negative RM338 million.
Despite the OCI reserve showing a deficit, LTAT said the combined reserve at the end of financial year 2022 (FY22) amount to a net positive balance of RM160 million, representing an improvement from the preceding year.
The unaudited post-dividend combined reserve for FY23 will see further improvement, reflecting itss commitment to its transformation journey towards strengthening its financial position, LTAT said.
"This net positive reserve position leads to a book value solvency of above 100 per cent, affirming that our net assets at book value surpasses the total contribution by our members," it added.
According to LTAT, the reserve fund remains constant, set at two per cent of contributors' account balance, providing a foundation for our financial security.
The OCI reserve comprises the accumulated unrealised gains/losses of assets tagged as fair value through other comprehensive income (FVTOCI), reflecting market fluctuations and asset performance.
On the issue of non-cash profit contributing to its income for FY22, LTAT said the exclusion of it still maintains a solvency position above the threshold required within its dividend policy.
As a retirement fund, LTAT said its dividends, when declared, are non-cash in nature and are credited to members' accounts.
Thus, it noted that its liquidity position remains stable, ensuring it can fulfil all commitments as they arise.
"LTAT remains committed to transparency, accountability and the well-being of the contributors and beneficiaries. We will continue to uphold the highest standards of governance and financial management to safeguard the interests of all stakeholders.
"In this regard, LTAT will engage with relevant stakeholders to address any queries or issues pertaining to our reserves and/or other pertinent matters concerning the sustainability of the fund," it added.