KUALA LUMPUR (Feb 27): The Employees Provident Fund (EPF) declared a 5.2% dividend for conventional savings and 4.9% dividend for shariah savings for pandemic-hit 2020.
Total distribution amounted to RM47.64 billion for 2020 (RM42.88 billion conventional savings and RM4.76 billion shariah savings) compared with RM45.82 billion for 2019.
While the EPF’s 2020 dividends were just below the 5.45% (conventional) and 5% (shariah) paid for 2019, the EPF’s distribution beat the 4.25 sen per unit income distribution by Permodalan Nasional Bhd’s Amanah Saham Bumiputera (ASB) for 2020 — the latter’s lowest-ever annual returns. ASB also paid a bonus of 0.75 sen for the first 30,000 units in conjunction with ASB’s 30th anniversary, bringing total distribution to RM7.6 billion in 2020. ASB distributed five sen per unit with 0.5 sen bonus in 2019.
The EPF’s 2020 dividend is within the range of 4.9% and 5.5% estimated by The Edge in early January based on the fund’s performance in the first nine months of 2020. The Edge had also said the EPF could pay at least 4.1% dividend for 2020 even if it did not make any money in the last quarter of 2020.
As projected by The Edge, the amount the EPF needed to pay 1% of dividend rose to RM9.2 billion for 2020 from RM8.5 billion for 2019.
The EPF's total investment assets grew 7.9% to RM998 billion, with total market value hitting RM1.02 trillion last year.
In a statement today, the EPF said it has been successful in posting a strong performance in 2020 despite the once-in-a-lifetime event stemming from the Covid-19 pandemic and the unique circumstances the world found itself in, with the twin health and economic crises.
EPF chairman Tan Sri Ahmad Badri Mohd Zahir said in the statement that the pension fund managed to safeguard its members’ retirement savings well while meeting their immediate needs to deal with the current challenges.
Ahmad Badri said it was not easy at times as the EPF had to walk a tightrope in ensuring that its members survive the difficult times while balancing their future needs.
“The quick spread of Covid-19 and its transmissibility made it a Black Swan event that many found challenging to manage. However, we were proactive in managing the pandemic and that helped us to ride through the challenges. Our focus on digitalisation enabled us to assist our members more efficiently and seamlessly while ensuring that we remain relevant to members who are more technology-savvy.
“The EPF’s speed of adaptability in its investment strategy and processes ensured that we were able to deliver optimum performance, and we further leveraged on the strength of our approximately 250-strong investment professionals who diligently managed the portfolios and took proactive measures. Solid teamwork and digital infrastructure ensured that we could adapt seamlessly to the new work norms,” he said.
According to the EPF’s statement today, following lower net contributions during 2020, the EPF’s ability to adapt to the current times ensured its investments were able to deliver long-term sustainable returns under the new normal.
The EPF said the fund recorded its highest-ever gross investment income of RM60.98 billion, with RM6.15 billion allocated to Simpanan Shariah.
"The strong performance was due to the prudent approach guided by the fund’s overall strategic asset allocation, which has kept the EPF resilient despite the unanticipated crisis. By asset class, fixed income instruments made up 46% of investments, while equities comprised 42%.
“Real estate and infrastructure as well as money market instruments made up 5% and 7%, respectively,” the EPF said.
"The EPF also rebalanced its investment portfolios based on thorough consideration on how the Covid-19 pandemic and global uncertainties such as the US Presidential election in November 2020, the continuous US-China trade dispute and the impact of the Brexit negotiations had influenced capital markets worldwide,” it added.
The EPF said today that as at December 2020, the fund had 33% of its investment assets outside of Malaysia across all asset classes.
Equities, particularly foreign equities, continued to be the driver of returns with a total income of RM28.71 billion while the private equity portfolio also demonstrated strong performance with a consistent income distribution.
"While leading stock indices lost as much as 40% in the first quarter, the EPF took the opportunity to rebalance its portfolio by acquiring shares that were fundamentally strong at attractive prices.
"The recovery in the second half of the year on the back of improved global and domestic markets also contributed significantly to the EPF’s investment portfolios, providing for profit-taking opportunities, particularly in the fourth quarter.
"The EPF took prudent measures to write down RM7.71 billion of its listed equity portfolio, to ensure that the fund’s long-term investment portfolios remain healthy,” the EPF said.
Ahmad Badri said in the statement that the EPF is a long-term investor and remains steadfast with its diversification programme across asset classes, strategies, managers, markets, countries and currencies.
He said contribution from overseas assets was also critical to the EPF's performance.
Commenting on the outlook for 2021, Ahmad Badri said the Covid-19 vaccine rollout in 2021 will have important bearings on the outlook for the year, as the EPF is also cognisant of new strains of Covid-19 that are easily transmitted.
"However, we believe that the situation is being well managed, with governments everywhere ensuring that the vaccines get to people as efficiently as possible while in Malaysia, the first batch of vaccines [has] arrived and will soon be administered to the population.
“The EPF, being a 70-year-old institution and one of the oldest pension funds in the world, will remain focused on our mandate to help members have enough savings for a sustainable retirement. We will also embark on a new withdrawal scheme to allow members to purchase insurance or Takaful products that was announced in Budget 2021, slated for an end of year rollout,” he said.
The State of the Nation: EPF 9M results show 4% dividend in the bag for 2020
CEO: EPF members should have a say on dividend — tiered or single
EPF assets hit RM1.02 trillion but 30% may have zero balance in Account 1, 60% for Account 2