Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the EPF’s gross investments for the first nine months of 2021 were already 7.7 per cent higher year-on-year at RM48.02 billion, compared with the same period in 2020.
"In that sense, there could be a chance that the dividend rate could be better than in 2020. I think it should at least match the 2020 level, if not better,” he told Bernama and estimated that the dividend would likely be between 5.20 per cent and 5.40 per cent for 2021.
In 2020, the pension fund manager declared a dividend of 5.2 per cent with a payout amounting to RM42.88 billion for conventional savings and 4.9 per cent for Shariah savings, with a payout totalling RM4.76 billion.
Mohd Afzanizam said the chance for a better dividend rate in 2021 would be higher should corporate earnings in the fourth quarter turn out better.
Furthermore, the EPF has also been diversifying its portfolios into overseas markets and incomes from foreign equities have made a significant contribution to its total income, he noted.
"So their portfolio diversification strategy has really paid off and it could be translated into a sustainable dividend rate going forward,” he added.
On special withdrawals under the EPF’s i-Sinar, i-Lestari, and i-Citra facilities, the economist reckons that the withdrawals would likely not have a severe impact on the dividend performance.
He observed that the economy had been able to grow in 2021 and the unemployment rate had trended down to 4.2 per cent in December 2021 from as high as 5.3 per cent in the middle of 2020.
Therefore, fresh contributions from the EPF members, along with maturing investment assets, would help to offset the withdrawal trend, he said.
Professor of economics at i-CATS University College Kuching, Datuk Shazali Abu Mansor, expects the EPF dividend rate to be between 5.5 per cent and 6.0 per cent in view of the better investment performance.
"Dividends should increase in tandem with income. It should be more than 5.2 per cent for 2021, if less than that then it is not justified,” he said.
Ambank Group chief economist and research head Anthony Dass said despite some domestic challenges, the overall performance of the local capital market was favourable, hence the dividend payout is expected to hover between 5.45 per cent and 6.0 per cent.
"With the economy starting to rebuild, more people will be employed and at the same time more jobs would be created from new lines of businesses that will rebuild EPF savings,” he said. "However, for the savings level to reach 2019 levels, it will depend on how much of the future contributions they can place in the EPF.”
"At the same time, the coverage and adequacy of social protection, particularly towards the self-employed and those in the informal sector, must be strengthened,” Dass added.
On the outlook for 2022, Mohd Afzanizam noted that a rising interest rate environment would help EPF’s revenue in the fixed income and money market instruments as the issuance of the new bonds would be pegged at a higher rate which translates into a higher coupon rate.
"Perhaps, the EPF’s strategic asset allocation (SAA) will help to guide the fund navigate through these turbulent times,” he said. - Bernama