Analysts: Payout within expectations

For the future: Members of the public lining up behind a counter at Menara KWSP in Kwasa Damansara, Shah Alam.

PETALING JAYA: The dividend payment by the Employees Provident Fund is within expectations with the fund reporting an improvement in performance for 2023 after a challenging period, say analysts.

They are also confident that the outlook for this year may be even better.

Malaysia University of Science and Technology economics professor Geoffrey Williams said, as he had expected, the EPF dividend this year was very strong.

“This is better than last year when it was only 5.35% (for Conventional savings) and it shows improvement in performance after a challenging year,” he said.

“The dividend payout should be satisfactory for most members. It is higher than the rate for fixed deposit and gives higher returns with lower risk than ASB (Amanah Saham Bumiputera) at 5.25%, for example.

“Although it is lower than in the past, it does reflect current domestic returns,” he said.

Williams said 2024 looked no more challenging than last year, and “possibly will be better”.

“We can expect a similar return this year so long as EPF is free to follow its best short-term and long-term strategy without outside interference,” he said, adding that EPF must be allowed to invest more freely, especially in foreign markets.

“The domestic equity markets have had very low and even negative returns so the EPF’s strategy has been more active in order to get better returns in local equity markets,” he said.

Bank Muamalat chief economist Mohd Afzanizam Abdul Rashid said the United States Federal Reserve’s decision on interest rates would likely influence the dividend outlook for 2024.

“It will really depend on the outlook of the interest rate in the US.

“It will set the tone for market sentiment, especially the traditional asset class such as equities and bonds in both domestic and overseas markets.

“The main uncertainty is the timing for the first interest rate cut,” he said, adding that the quantum of the new rates would also be a determining factor.

Mohd Afzanizam said EPF’s portfolio diversification strategy had proven to be successful in generating higher investment income for 2023.

He said going forward, there could be more investment opportunities in the Syariah sector in the future, following the separation of Syariah and Conventional savings into separate portfolios.

Malaysian Trades Union Congress president Mohd Effendy Abdul Ghani said the stability of EPF’s dividend had given confidence to employees about their EPF savings.

It also showed that there was an increasing and stable economic growth, he said.

“EPF’s commitment to maintaining strong dividends gives certainty to employees about the growth of their savings in the long term so that each contributor has a minimum savings of around RM240,000 upon retirement,” he said.