EPF declares 5.35% dividend for conventional savings, 4.75% for syariah

SHAH ALAM: The Employees Provident Fund (EPF) has declared a dividend rate of 5.35% for Conventional Savings for 2022, with a total payout amounting to RM45.44bil as well as a 4.75% for Syariah Savings, with a payout amounting to RM5.7bil.

In total, the retirement fund’s payout for 2022 amounts to RM51.14bil.

Last year, EPF declared dividends of 6.1% for conventional savings (for the year 2021) and 5.65% for syariah savings.

Over the past 10 years, EPF's dividend payout for conventional savings has 5.8% in 2010 followed by 6% (2011), 6.15% (2012), 6.35% (2013), 6.75% (2014), 6.4% (2015), 5.7% (2016), 6.9% (2017), 6.15% (2018), 5.45% (2019) and 5.2% (2020).

For syariah savings, it recorded dividends of 6.4% in 2017, 5.9% (2018), 5% (2019) and 4.9% (2020).

The RM51.14bil payout will benefit more than 15 million EPF members, which include members from the informal sector who are registered under the i-Saraan scheme.

Driven by high market volatility and lower valuations across equity and fixed income markets, the EPF recorded a lower total gross investment income of RM55.33bil as of Dec 31,2022 compared to RM68.89bil in 2021.

From the gross investment income of RM55.33 bil, RM6.83bil were allocated to Simpanan Shariah.

EPF Chief Executive Officer Datuk Seri Amir Hamzah Azizan said during the fund’s annual dividend announcement on Saturday (March 4) that the assets under management (AUM) remained stable despite the withdrawals coming up to RM145 bil.

EPF’s investment assets remain intact and closed at RM1.003 trillion in December 2022, which is a slight reduction of 0.7% from the RM1.01 trillion in 2021.

By broad asset class, Fixed Income instruments made up 47% of investment assets, while Equities comprised 42%. Real Estate and Infrastructure as well as Money Market instruments made up 7% and 4% of EPF assets, respectively.

As for its asset class, equities contributed RM30.54bil, or 55% of the EPF’s total gross income, lower compared to the RM41.06bil recorded in 2021.

Foreign listed equities, which yielded a return on investment (ROI) of 9.27%, continued to be the driver of returns for this asset class.

The private equity portfolio also demonstrated strong performance, recording an ROI of 13.65%. This portfolio generated lower gross investment income compared to 2021, largely due to lower valuations of the underlying assets, apart from lower distributions received for the year.

To ensure long-term portfolio health, EPF took the prudent measure of writing down RM3.43 bil of its listed equity portfolio in 2022, which was higher than the RM1.15bil write down recorded in 2021, in line with the volatility in the equity markets.

A total of 74% of the total amount came from Shariah-compliant counters that underperformed, which in turn impacted the EPF’s Simpanan Shariah performance for the year.

EPF was able to maintain steady returns, with almost half of the EPF’s total asset allocation being in fixed income instruments, comprising Malaysian Government Securities and Equivalent, as well as Loans and Bonds.

The portfolio contributed an income of RM18.19 bil, or 33% of the EPF’s total gross income. This was lower than the income from 2021 due to lower capital gains driven by increasing yields.

The Real Estate and Infrastructure portfolio’s income of RM5.56bill continued to play a role as a hedge against inflation, recording an Return of Investment (ROI) of 10.50%, a spread of 6.13% above the ROI for Fixed Income instruments of 4.37%; whereas income from Money Market instruments came in at RM1.04 bill with an ROI of 3.48%.

The performance of these two asset classes is in line with the return expectations set by the Strategic Asset Allocation (SAA).

Despite the numerous macroeconomic challenges and the pandemic related withdrawals totalling RM145 billion, the EPF’s investment assets remained intact and closed at RM1,003 billion in December 2022.

Managing the withdrawals was a difficult challenge for the fund, given the need to ensure sufficient liquidity. Even as the EPF successfully navigated through the situation, the cash outflow limited the EPF’s ability to take advantage of investment and profit opportunities for the benefit of all members.

The EPF’s diversification into foreign assets and currencies also allowed it to realise additional gains with profits from non-Ringgit sources and added value to the retirement fund’s overall return.

As of Dec 2022, foreign investment made up about 36% of the EPF’s investment assets and contributed 45% of the EPF’s total gross investment income.

Meanwhile, EPF Chairman Tan Sri Ahmad Badri Mohd Zahir said in a statement that the EPF investment portfolio maintained its resilience and responded with minimal impact despite the persistent global market downturn in 2022.

“This was largely due to our overarching strategy that emphasises long term sustainability of investments and returns, in line with the EPF’s Strategic Asset Allocation (SAA),” he said

EPF’s well diversified portfolio and healthy liquidity helped to reduce risk and enabled the fund to maintain investment assets at above RM1.00 trillion and deliver respectable dividend rates for 2022,” added Ahmad Badri.

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