Its president Datuk Abdul Halim Mansor said while MTUC was not entirely satisfied with the rate of 5.45%, he noted EPF’s heavy responsibility in deciding the rate based on the returns from its investments, impacted by economic uncertainties.
“On the domestic front, the KLCI had dropped by about 6% last year, making the nation’s stock market among the worst performers in this region.
“The local equity market was also weak. Globally, geopolitical developments and the US-China trade war were among the factors that have stunted the global economy.
“All these developments have impacted EPF’s investments. We are confident EPF will take appropriate measures to strengthen investment policies and tackle the economic headwinds ahead,” he said.
Abdul Halim called on the government to give EPF the leeway to invest abroad more aggressively to offset any downturn in the domestic economy.
“Returns from investments abroad have been very positive, enabling EPF to announce satisfactory dividends for 2019.
“In this context, we are confident EPF can make improvements to its internal processes and procedures to approve investments locally and abroad to maximise returns,” he said.
He also urged the government to ensure national policies were continually reviewed and improved to help stimulate investment and raise productivity.
“Dynamic policies must be put in place to address the challenges of the digital era. This will help elevate Malaysian companies and GLCs into truly competitive global players,” he said.
Yesterday, EPF declared a dividend of 5.45% for Conventional Savings and 5% for Syariah Savings for 2019.
The pension fund said the payout amounted to RM41.68bil and RM4.14bil respectively.
This is the lowest dividend rate for Conventional Savings since 2008.
For 2018, EPF declared dividends of 6.15% for Conventional Savings and 5.9% for Syariah Savings.
The EPF said its overall investment assets grew to RM924.75bil as it experienced a 2.8% growth in membership to 14.6 million while its registered employer base expanded by 3% to 522,300 employers.EPF chief executive officer Tunku Alizakri Alias (pic) said as anticipated, there was substantially more volatility in 2019.
“There were three rate cuts made by the US Federal Reserve, the US-China trade spat escalated and were surrounding the Brexit negotiations.
“On top of this, we did not expect the Hong Kong protests to be prolonged, adding pressure to an already fragile far-east market,” he said.
Tunku Alizakri said the domestic markets also did not support the income-generating capabilities of the EPF as 70% of the fund’s assets were in Malaysia, with a major part in domestic equities.
“But our strategic asset allocation and decision-making structure provide a robust system that guides and shields us from the storms.
“Thanks to this, we have fulfilled the mandate from our members of preserving and growing their capital,” he said, adding that much of these achievements could be attributed to the long-term diversification strategies.
Tunku Alizakri said EPF had always held that overseas holdings were an important part of its overall portfolio and that these diversification efforts would continue to reduce concentration risks.
The EPF Act requires it to declare at least a 2.5% nominal dividend every year.
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