When the safety net frays

FOR millions of Malaysians, Lembaga Tabung Haji (TH) has never really been a financial product.

For many of us, it is part of our religious tradition. It is a jar on the shelf, a discipline passed from parent to child, a quiet promise that one day there will be enough for the pilgrimage.

So, when the Royal Commission of Inquiry’s (RCI) report into TH was declassified in July 2026, the shock went beyond a boardroom scandal.

It exposed how thin the line can be between a savings institution people trust with their life’s goals and one that fails them.

The RCI’s findings are stark. In 2017, an institution managing RM91.7bil on behalf of 9.55 million depositors reported a RM3.4bil profit while, in reality, it had suffered a RM1.4bil net loss.

Investigators found “creative accounting”: impairment policies quietly revised twice in one year to inflate asset values; only RM556mil of RM4.6bil in assets ever professionally valued; and dividends paid out that the Tabung Haji Act should never should have allowed once liabilities began exceeding assets.

Governance had collapsed just as badly. Active politicians sat on the board, directors lacked the banking and accounting expertise the fund’s own investments demanded, and Bank Negara Malaysia’s five separate warning letters went largely unheeded.

The eventual toll was RM12.6bil in investment losses and a RM19.9bil government bailout to stop the fund from unravelling in 2018.

Depositors, sensing the danger before it was ever formally confirmed, pulled out roughly RM6bil in 2019 alone.

What the report doesn’t spell out, but what anyone who has watched Malaysian households save for haj already knows, is who was most exposed.

TH accounts are disproportionately opened by parents for their children, held by women who set aside modest, steady monthly deductions, and treated as the primary savings vehicle for many households.

It is not unusual for a woman’s TH account to be the only long-term saving she has outside the Employees Provident Fund (EPF). For some, it is the only one, period.

That pattern matters because it sits inside a much larger, quieter gap. Malaysian women still earn less than men over their working lives.

Mean monthly earnings for women stood at RM3,499 in 2025, trailing men throughout the earnings distribution, while career breaks for caregiving compound the shortfall year after year.

As of late 2024, only around a third of EPF members had accumulated the RM240,000 “basic savings” benchmark needed to retire on.

Women, with lower contributions and more interrupted careers, are structurally more likely to fall short of even that modest bar.

Participation in equities and unit trusts is improving – female-opened trading accounts rose 36% in a single year during the Covid-19 pandemic-era investing boom – but that growth started from a very low base, and most Malaysian women remain effectively absent from capital markets.

For many, one government- linked fund has had to do the work that, ideally, a diversified portfolio of EPF, insurance, property and investments would share.

That is precisely why the RCI’s findings should alarm us more, not less. A single-institution strategy only works if that institution is unimpeachably well run.

When an institution that millions of women rely on as their sole savings vehicle can quietly report a profit while sitting on an actual loss, the risk isn’t abstract.

It is the pilgrimage, the fifth pillar demanded of all Muslims, that never quite arrives.

If we fail to act on both fronts, fixing institutions and closing the underlying savings gap, the consequences will compound.

Malaysia’s gender pension gap, already visible in EPF adequacy statistics, will widen as more women reach 55 or 60 with insufficient reserves, becoming more dependent on adult children or the state than any generation before them.

Trust itself becomes a casualty. Depositors who watched TH understate its losses may simply stop saving formally at all, retreating to cash or informal arrangements with even less protection.

An entire cohort of women, having done everything asked of them – saving consistently, trusting the institution, waiting their turn – could find that discipline was never enough on its own.

The RCI has already forced real change: politicians are now barred from TH’s board, over 75% of its 25 recommendations had been implemented by mid-2026, and audited, expertise-led governance is finally the standard.

That must hold. But institutional reform alone won’t close the gap.

Financial literacy programmes aimed specifically at women, employer and policy support that protects EPF contributions through career breaks, and a cultural nudge toward diversifying beyond a single fund are just as urgent.

TH’s crisis was a governance failure. Letting it become a template for how women save – one account, one institution, one hope – would be a different kind of failure, and one entirely within our power to prevent.