Lower EPF dividend declared for 2022

KUALA LUMPUR, 4 March 2023:

The Employees Provident Fund (EPF) board today announced a dividend rate of 5.35% for conventional savings with a total payout of RM45.44 billion and 4.75% for syariah savings with a total payout of RM5.70 billion – bringing total payout amount for 2022 to RM51.14 billion.

The latest dividend rates are lower than the 6.1% (conventional) and 5.35% (syariah) declared for 2021 as EPF recorded a lower total gross investment income of RM55.33 billion, compared to RM68.89 billion in 2021 – driven by high market volatility and lower valuations across equity and fixed income markets.

Chairman Tan Sri Ahmad Badri Mohd Zahir said in a statement: “The EPF’s well diversified portfolio and healthy liquidity helped to reduce risk and enabled the fund to maintain investment assets at above RM1 trillion and deliver respectable dividend rates for 2022.”

He noted 2022 was marked by both slower global growth and high inflation rates, compounded by the tightening of monetary policies by major central banks to reel in inflationary pressure.

“Fixed income markets did not fare well as bond indices posted negative returns for the year, largely attributed to elevated yields following continued US Federal Reserve rate hikes.”

Further depressed by the Russian-Ukraine war, he said: “The year also saw major global equity benchmark indices wrapping up their worst annual performance since 2008, falling between 20% to over 30% during the year. On the domestic front, the FBM KLCI closed the year 5% lower year-on-year at around the 1,495-point level.

“The bearish market performance had weighed on the EPF’s earnings generation from equities, which continued to be the EPF’s main income contributor.”

Despite 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.”

On the positive front, there were more new members registrations of 635,989 (2021: 421,643) as well as new employers at 93,669 (2021: 72,518) – indicating economic growth post-pandemic.

However, EPF savings remain well below financial sustainability levels, even for the top 20% wage earner, with an average of RM260,205 – far below the RM500,000 estimated to be needed for someone who makes a full withdrawal at 55 and lives on only this income till past age 80.