KUALA LUMPUR: The Employees Provident Fund (EPF) does not have much expectation of a record-breaking dividend payout to members this year due to a poor capital market performance. It is understood that due to the slower realised returns from the stock market, this year its members will not enjoy the bounty of the 6.75% dividend of 2014.

“The 6.75% dividend payout last year was exceptional. I don’t think that rate can be achieved this year … not with the current performance of the stock market. It is not good,” a source close to the pension fund told The Edge Financial Daily.

“However, we would be able to beat our benchmark of 2% over three-year average inflation, but I can’t be certain of the estimated dividend (rate),” said the source.

The source said the dividend rate is based on the realised returns of its strategic asset allocations, which determine the EPF’s ability to meet its target of ensuring a good returns for 14.19 million members.

The budget for realised returns is also subject to revision in terms of asset classes, the source said.

Last year, the EPF paid out RM36.6 billion to members after announcing a record 6.75% dividend since the 1997/98 Asian financial crisis.

It also saw a 16.2% rise in net investment income of RM37.8 billion from RM32.5 billion in 2013.

Speaking to the media at the International Social Security Conference 2015 yesterday, EPF chief executive officer Datuk Shahril Ridza Ridzuan said it is too early to determine the dividend rate this year because much depends on the economy and how the markets perform.

“However, the first quarter ended March 31, 2014 financial report to be released at the end of this week would provide an indication,” he said.

Asked if the EPF is confident of a 10% growth rate to surpass RM700 billion from RM636 billion last year for its assets under management this year, Shahril said this is not “so much the issue” compared with the rate for realised returns.

“The growth of our asset base management wasn’t the issue … [rather] what is the realised returns from the markets as that depends on the market performance and how it works for us.

“[For now] we are comfortable with our strategic asset allocations which gives us the best chance possible of meeting our targets.

“We need to remind everyone that the key target for the EPF is to make sure we have above 2% inflation realised return for the members,” he said, adding that he is confident of achieving the benchmark.

This article first appeared in The Edge Financial Daily, on May 20, 2015.