Several experts have predicted that the Employees Provident Fund (EPF) will declare a higher dividend this year, given that it recorded a stronger performance and total investment income in the first nine months of 2023 financial year.

Chief economist of Bank Muamalat, Mohd Afzanizam Abdul Rashid forecasted that the dividend rate could fall between 5.5% to 6% for conventional savings, and between 5% to 5.5% for shariah savings. This is as compared to the previous 5.35% and 4.75% declared for for conventional and savings, respectively.

Justifying his statement, Mohd Afzanizam said that the EPF had reported a 19.34% year-on-year (YoY) increase in total investment income to RM14.67 billion in the third quarter of last year, after deducting write-downs. Additionally, the EPF’s investment income totalled up to RM47.86 billion for the first nine months of 2023, up to 30 September, which was 33% higher than the RM36.04 billion recorded in the same period in 2022.

“Plus, 38% of its [the EPF’s] asset allocation is exposed to the global markets and given that global equities have done well in 2023, it should positively contribute to the EPF income last year. Hence, we can expect a better dividend rate from EPF,” said Mohd Afzanizam.

Similarly, economist from Malaysia University of Science and Technology (MUST), Prof Dr Geoffrey Williams also said that EPF members can hope for a good return of around 5.5% to 6% – maybe even more – due to the strategic asset allocation (SAA) policy that the provident fund employs. The policy ensures that the EPF’s investment portfolios are diversified across various assets in different regions; these include fixed-income assets, government securities, stock markets, real estate, and even venture capital in Malaysia and overseas.

“The economic conditions have raised interest rates on fixed deposits slightly, equities overseas have been strong, the Dow Jones was up 16.5%, and the S&P 500 was up 24%. The Kuala Lumpur Composite Index (KLCI) was up around 7%,” Prof Williams further pointed out.

Meanwhile, another financial expert who declined to be named said that a 5.5% dividend is likely if the EPF reports an investment income of about RM60 billion based on an asset under management (AUM) of RM1.1 trillion for the financial year of 2023. However, if this investment income hit RM66 billion, then Malaysians can hope for dividends of up to 6%.

That said, the expert also acknowledged that the final percentage announced may depend on various other factors, aside from pure calculations. “While this is the calculation, it depends on performance and decisions to declare how much of this gain will be distributed as dividends,” he said.

The EPF is expected to make its dividend announcement for the financial year of 2023 in early March 2024.

(Source: The Star)

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• Dr Geoffrey Williams
• Dr Mohd Afzanizam Abdul Rashid
• Employees Provident Fund
• Employees Provident Fund (EPF)
• EPF Dividends
• Geoffrey Williams