EPF declares 5.45% dividend for 2019 , the lowest since 2008

Chart by EPF, The Edge Estimates

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KUALA LUMPUR (Feb 22): The Employees Provident Fund (EPF) declared 5.45% dividend for Simpanan Konvensional and 5.0% for Simpanan Shariah in 2019.

The 5.45% dividend declared for Simpanan Konvensional is indeed the lowest since 2008, when the provident fund declared 4.5%. For Simpanan Shariah, it is the lowest dividend declared since it started in 2016.

The provident fund declared 6.15% dividend for Simpanan Konvensional and 5.9% for Simpanan Shariah in 2018.

The total dividend payout will amount to RM45.82 billion, of which RM41.68 billion for Simpanan Konvensional and RM4.14 billion for Simpanan Shariah.

EPF pointed out in a statement today that the payout amount required for each 1% of the dividend in 2019 for Simpanan Konvensional increased to RM7.65 billion from RM6.99 billion in 2018, while for Simpanan Shariah rose to RM0.83 billion, compared to RM0.73 billion in 2018.

It also highlighted that the dividend of 5.45% declared for conventional savings is indeed 2.95% above what is mandated under the EPF Act 1991 that requires the provident fund to declare a minimum 2.5% nominal dividend every year.

The fund’s three-year average dividend for Simpanan Konvensional after adjusting for inflation was at 4.33%, which is 2.33% above the fund’s three-year rolling target of 2.00%, the statement said.

EPF’s overall investment assets expanded to RM924.75 billion given a 2.8% growth in membership to 14.6 million.

“As anticipated, we saw substantially more volatility in 2019 as compared to 2018,” said Chief EPF Officer Alizakri Alias said the statement this afternoon.

Alizakri expected 2020 to be “just as or even more challenging than 2019, with the full impact of the COVID-19 virus likely to drag down already soft global growth”.

“The US-China trade war still sees no signs of ending, among other risks to economic recovery. We hope that the domestic markets will be resilient, especially in light of the soon-to-be-announced government stimulus package which should help support investor and consumer sentiment,” said Alizakri when commenting on current year’s prospects.

He noted that while many issues in the global markets remained unresolved, there were new ones cropping up, for instance, the prolonged Hong Kong protest that had added pressure on an already fragile Far-East market.

“In addition, the domestic markets did not support the income-generating capabilities of the EPF as 70% of the fund’s assets are in Malaysia, with a major part of our assets in domestic equities,” said the chief officer.

“The EPF has always held that overseas holdings are an essential and important part of our overall portfolio, and have already announced on several occasions our intentions to continue these diversification efforts to reduce concentration risks,” he commented.

Explaining the differing dividend rates between Simpanan Shariah and Simpanan Konvensional, Alizakri said, “The dividends from Simpanan Shariah differs because the universe of assets that we can invest in and which are Shariah-compliant are not as wide as that available for the conventional option. A majority of the investments were in the domestic markets, which did not perform as well in 2019.”