KUALA LUMPUR: The Employees Provident Fund (EPF) has announced a 4.25% dividend for last year, down by 0.75% compared with 2001.
The rate represented a payout of RM7.735bil as against RM8.35bil for the previous year.
EPF chairman Tan Sri Abdul Halim Ali said the lower rate was due to the difficult investment environment of a low interest rate regime and a lacklustre stock market over the past four years.
“As a result of the low interest rate regime, the rates of return for fixed income instruments in 2002 declined, compared with 2001.
“Gross income from equity showed an improvement, but higher provision for paper losses negated income contribution from this asset class,” he said in a statement yesterday.
Despite the lower rate, Abdul Halim said the dividend represented a 2.45% positive real rate of return considering the inflation rate of 1.8%
“The EPF will continue to pursue a prudent investment strategy and is committed to preserving the value of the members’ fund in a challenging investment environment arising from global developments,” he said.
He added that the pressures of delivering high returns for 2003 and the next few years were expected to persist.
Abdul Halim said EPF made a net income of RM7.78bil in 2002 after deducting RM2.14bil in equity paper losses from a gross income of RM10.75bil.
He said last year’s gross income (RM10.75bil) was lower than 2001 (RM11.26bil) because of lower yields from interest-bearing instruments like the Malaysian Government Securities (MGS), loans and bonds.
He said income from MGS was RM4.55bil (compared with RM4.71bil in 2001), loans and bonds RM3.05bil (3.89bil), money market instruments RM989mil (RM1.31bil), equity RM2.10bil (RM1.29bil) and property RM18mil (RM17mil).
“Returns from equity investments in 2002 improved due to realised gains from a more positive market performance in the first half of the year when the (Kuala Lumpur Stock Exchange) composite index hit the highest closing of 808 points but declined to lower levels in the later part of the year,” he said.
Abdul Halim said fixed income instruments, like MGS, and loans and bonds, accounted for 75% of EPF’s investments for 2002.
Of the RM203.78bil invested by EPF as at Dec 31, 2001, he said RM72.98bil (35.81%) was in MGS, RM51.87bil (25.45%) in loans and bonds, RM27.56bil (13.53%) in money market instruments, RM49.98bil (24.53%) in equity, and RM1.38bil (0.68%) in properties.
Acting Prime Minister Datuk Seri Abdullah Ahmad Badawi said the 4.25% dividend was accepted by the Government as the most reasonable rate that the fund could give.
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