KUALA LUMPUR (March 13): Lembaga Tabung Angkatan Tentera (LTAT) has declared a dividend rate of 5% for 2022, with a total payout of RM476.45 million.

This is higher than the 4.1% dividend rate declared in 2021 and beat the previous total payout of RM379.42 million.

The armed forces pension fund had declared its lowest-ever dividend of 2% for 2018 after its net profit was halved, following an investigative audit that had revealed years of alleged mismanagement and irregularities. Prior to that, it was yielding a stable annual dividend of 6% to 8%.

Since then, LTAT has put in place a five-year strategic plan as it tries to move beyond the scandal. The fund managed to declare a dividend of 2.5% for 2019 and 3.5% for 2020.

The 2022 dividend was distributed to 122,935 LTAT members last Friday (March 10). Under the LTAT scheme, contributors are required to contribute 10% of their monthly salary with the government, while their employer will contribute 15%.

At a ceremony to announce the LTAT dividend for 2022 on Monday (March 13), Defence Minister Datuk Seri Mohamad Hasan said the dividend payout for 2022 was drawn from the fund's operation profits and did not touch on the reserve fund.

In his speech, Mohamad said he advised LTAT to have a prudent payout policy and to not compete with other agencies in announcing high dividends.

“This is the best level that we can pay, slightly above the market rate. Interest rate offered by the market now is about 4% but we are giving 5%, so I think it is good for all our armed forces,”  he told a press conference following the ceremony.

“We must have a ratio to put in our reserve fund, we don't have to give 100% (of our profit) back to contributors in the form of dividends. We won’t know what happens in the year 2024, 2025 and we may need this reserve.”

Mohamad added that even though he does not want to put pressure on LTAT with any future dividend rate expectation, he hopes that the fund can maintain its dividend rate of 5% for 2023 on a best effort basis.

LTAT chief executive Datuk Ahmad Nazim Abd Rahman said the statutory body recorded RM652.36 million in gross income for 2022, up 27.4% from RM511.95 million in 2021, driven by contributions from public equity and private equity investments.

He said the pension fund also posted RM499.64 million in retained earnings (post dividend) as at Dec 31, 2022, up 72.8% from RM289.15 million from a year earlier.

As for LTAT’s assets under management (AUM), this increased 5.66% to RM10.33 billion in 2022 from RM9.77 billion in 2021. It observed a compound annual growth rate of 3.7% after recording AUM of RM9.26 billion in 2020, RM9.22 billion in 2019 and RM8.94 billion in 2018.

Nazim said LTAT aims to deliver competitive and sustainable dividend returns, at the rate of 1.25% above fixed deposit rate, over the long term.