In total, EPF’s total payout amount for 2023 amounted to RM57.81bil.
PETALING JAYA: The Employees Provident Fund (EPF) Board has declared a dividend rate of 5.50% for Simpanan Konvensional, with a total payout of RM50.33bil and 5.40% for Simpanan Shariah, with a total payout of RM7.48bil.
In total, the retirement fund’s payout amount for 2023 amounts to RM57.81bil.
In the past year, EPF's total investment income surged by 29% to RM66.99bil from RM51.91bil in 2022. This growth, inclusive of listed equity write-downs, reflects the fund's prudent practice of paying dividends solely from realised income.
Out of the total, RM5.72bil came from mark-to-market gains, excluded from dividend distribution. EPF's investment assets saw a strong 13% increase, reaching RM1,135.82bil, propelled by a 15% rise in contributions to RM97.56bil in 2023 from RM84.78bil in 2022.
“EPF is able to deliver improved dividends following a resilient performance in 2023, with equities playing a significant role in driving overall performance,” says EPF chairman Tan Sri Ahmad Badri Mohd Zahir.
“Despite the intensifying geopolitical tensions, elevated interest rates, inflation, regional conflicts and China’s property sector woes, the global economy showcased resilience and fared better than expected. This allowed EPF to actively manage its diversified portfolio and capture opportunities to enhance returns.
“After netting off the inflation rate, the real dividend for Simpanan Konvensional was 2.89% and 2.51% for Simpanan Shariah on a rolling three-year basis (2021-2023), exceeding EPF’s strategic target of at least 2% real dividend over the same period.
“As a retirement fund, it is important for EPF to consistently deliver long-term above-inflation returns to preserve and enhance the value of its members’ savings.”
EPF’s portfolio diversification and active fund management enable it to deliver improved dividends for 2023.
The RM57.81bil dividend distribution will benefit more than 16 million EPF members, encompassing individuals from both formal and informal sectors.
Last year saw a mixed performance in the global equities market, particularly between the Asean region against other developed markets.
Regionally, the FBMKLCI and Asean indices both saw negative growth with the FBMKLCI declining 2.7%. Despite this decline, EPF actively managed its portfolio to generate earnings from equities.
EPF chairman Ahmad Badri said the overall market volatility in 2023 underscored the importance of a robust investment strategy and prudent risk management.
He added that the fund’s Strategic Asset Allocation (SAA), paired with active portfolio management, enabled it to achieve the results for 2023.
Investment portfolio performance
The equities asset class contributed RM39.05bil after netting off write-downs, accounting for 58% of EPF’s total investment income with a return of investment (ROI) of 8.68%.
The increase is higher compared to the RM27.12bil in 2022, which was attributed to higher capital gains following better market conditions.
Listed equity write-downs were minimal at RM0.40bil, compared to the RM3.43bil recorded in 2022, while private equity investments generated an ROI of 9.69%.
Fixed income instruments, predominantly Malaysian Government Securities (MGS), continued to be the anchor for the portfolio in maintaining steady returns.
The asset class contributed RM19.74bil, or 30% of EPF’s total investment income, yielding an ROI of 4.41%.
The increase, amounting to RM18.15bil, is in line with the growing asset size and is contributed by interest and profit income from bonds and sukuk, respectively.
Real estate and infrastructure registered an income of RM6.03bil, representing 8% or an RM0.43bil increase compared to 2022, recording an ROI of 5.04%.
Income from money market instruments was RM2.17bil, more than double the income generated in 2022, owing to higher money market balances and foreign currency translation, delivering an ROI of 4.93%.
Fixed income made up 46% of investment assets, while equities comprised 42%. Real estate and infrastructure, as well as money market instruments, made up 7% and 5% of EPF assets, respectively.
In December 2023, EPF’s investment assets stood at RM1,135.82bil, of which 62% was invested domestically.
Domestic investments generated RM31.71bil, or 47% of total investment income, which provided stability to EPF’s overall total investment income. Global assets generated income of RM35.28bil, or 53%, of the total investment income recorded.
A total of RM58.97bil out of the RM66.99bil total investment income was generated for Simpanan Konvensional and RM8.02bil for Simpanan Shariah.
Investments in domestic market remain high
EPF remains the largest investor in the domestic market with an asset under management (AUM) of RM702.48bil in 2023, compared to RM643.38bil in 2022.
Deployment into the domestic market accounted for more than 80% of 2023’s investment allocation, providing capital to Malaysian companies and the economy as a whole.
In 2023, EPF held about 28% of the outstanding MGS and Government Investment Issues (GII) issuances, and about 12% of the FTSE Bursa Malaysia Top 100 Index market capitalisation.
EPF’s participation in Bursa Malaysia, in terms of value traded, was 23% for FBM100 stocks and 31% for FBMKLCI stocks.
This includes trading by domestic external fund managers, which for the past five years have received over RM4bil allocation for domestic equity portfolios.
In addition, EPF’s allocation of over RM3bil to external fixed-income managers has brought the total allocation to Malaysian fund managers to over RM7bil.
These allocations are part of EPF’s long-term diversification effort to spur the domestic capital market and asset management industry.
“EPF’s active participation in the domestic equity market is integral to our mission of creating long-term value for our members,” says Ahmad Badri.
“It continues to increase allocation to external managers, further diversifying its investments while supporting the growth of domestic fund managers.”
Membership growth
EPF’s 2023 performance results reported positive growth in member registrations in line with the continued strengthening of the Malaysian labour market.
As of December 2023, new member registrations amounted to 460,447, bringing the total number of EPF members to 16.07 million.
Out of that amount, a total of 8.52 million were active members, which now represent 50% of Malaysia’s 17.03 million labour force at the end 2023.
The increase in active members over Malaysia’s total labour force was attributed to the fund’s coverage expansion initiatives.
Ahmad Badri said extending EPF’s reach ensures more individuals have access to proper social protection and future income security, fostering greater financial inclusivity and resilience across society.
EPF’s ongoing efforts in widening coverage is shown in the encouraging growth of its i-Saraan programme, which allows workers in the informal sector or with no formal income to save for their retirement with EPF.
In 2023, the number of i-Saraan participants recorded a substantial increase of 31% to 382,983 from 291,743 in 2022.
Overall, total contributions collected during 2023 increased to RM97.56bil, an improvement of 15% from 2022.
The increase reflects improvements in members’ financial capacity resulting from the progressive recovery of incomes, employment and the economy.
New employer registrations were recorded at 82,005 at the end 2023, bringing the total number of employers registered with EPF to 606,187.
Outlook 2024
The International Monetary Fund has projected that global growth to be 3.1% in 2024, below the historical average of 3.8%. Major central banks are expected to lower policy rates as inflation starts to wane.
Bank Negara Malaysia has projected a GDP growth of 4% to 5%, driven by continued growth in domestic demand and a recovery in external demand.
Global financial markets remain at risk of geopolitical developments, particularly concerning ongoing regional conflicts.
“Views are still mixed on the global growth outlook. Since the pandemic, the world has had several years of uncertainty and countries have demonstrated a real sense of resilience and agility,” says Ahmad Badri.
“While the global markets presented formidable challenges, EPF’s resilient investment approach and unwavering focus on long-term value creation should set the path for it to continue to deliver strong performance and uphold its commitment to its members.”
Starting January 2024, EPF has separated its Simpanan Konvensional and Simpanan Shariah portfolios to allow each portfolio’s returns to be optimised in the long run, with each having an independent SAA.
The separation also ensures that assets under both Simpanan Konvensional and Simpanan Shariah are diversified across asset classes, geographies, markets and industries to ensure sustainable returns.
Retirement security a key priority
EPF is set to embark on several initiatives to meet the evolving needs of its members – ensuring financial resilience and well-being during their retirement years.
The ongoing trend towards a higher prevalence of informal employment over formal employment will serve as a driving force behind the continued implementation of the fund’s strategic initiatives.
To help members build future income security, EPF’s range of products and services has been enhanced to tailor to different life stages and financial goals.
This includes the expansion of its i-Saraan programme, in which the government’s maximum matching incentive limit has been increased from RM300 to RM500 per year, to encourage members to continue saving for retirement.
In addition to boosting retirement savings, EPF’s i-Lindung Phase 2 was launched in February to allow members to use funds in their Account 2 to purchase insurance and takaful products, consisting of life and critical illness protection for their immediate family members.
Concurrently, EPF’s Outreach Programme recorded positive and encouraging growth in the effort to promote voluntary contributions to build up members’ retirement savings.
In 2023, the number of members who made voluntary contributions increased 17% to 905,923 in 2023, compared to 772,687 in 2022.
Ahmad Badri said EPF will continue to support the implementation of initiatives that seek to catalyse the accumulation and strengthen members’ retirement income, to help current and future EPF members achieve a dignified retirement.
The crediting of the dividends for both Simpanan Konvensional and Simpanan Shariah was completed on March 3. Members may check their accounts via i-Akaun or get their statements from any EPF Self-Service Terminal (SST) nationwide.
