The Employees Provident Fund(EPF) is expected to declare a 2025 dividend of about 5.8% to 6.3% for Conventional Savings and 5.5% to 6.0% for Shariah Savings, based on current investment performance and fund management considerations.

The projection was shared by Global Asia Consulting senior consultant Samirul Ariff Othman, who said the expected range aligns with EPF’s strong investment income recorded in the first nine months of the year. However, he stressed that the final outcome will depend on disciplined profit realisation and the fund’s long-term reserve requirements.

Strong Nine-Month Performance Sets a Positive Base

EPF recorded investment income of RM63.99 billion in the first nine months of 2025, an 11% increase from RM57.57 billion in the same period last year. This reflects a healthy earnings trajectory and provides a solid base for dividend consideration.

Samirul said the projected dividend range is reasonable given this performance and EPF’s governance framework, which prioritises sustainability over short-term gains.

Why Not All Investment Gains Become Dividends

A key point contributors should understand is that not all investment gains can be distributed as dividends.

Samirul explained that unrealised gains, including mark-to-market gains driven by foreign exchange movements, cannot be paid out. These paper gains may fluctuate and only become distributable once profits are realised.

Even when headline investment income appears strong, EPF must retain part of its earnings as reserves. This directly limits how high dividends can go in any given year.

Shariah Savings Typically Slightly Lower

The expected difference between Conventional and Shariah Savings dividends reflects structural constraints in Shariah-compliant investing.

According to Samirul, the Shariah portfolio does not include conventional bonds, has fewer risk-hedging tools, and is more exposed to equity market cycles. In recovery years, the gap may narrow, but during periods of global uncertainty, such as 2025, a difference of around 0.2 to 0.3 percentage points is still typical.

Higher Dividend Expectations Seen as Unlikely

Samirul dismissed expectations of dividends reaching 6.5% or even 7.0%, despite the encouraging nine-month results.

He said EPF’s mandate is not to maximise dividends in a single year, but to ensure sustainable returns over decades. With total fund assets exceeding RM1 trillion, a growing number of retirees, and increasingly critical reserve requirements, the fund is particularly sensitive to the risks of over-distribution.

From a pension fund governance perspective, he said a Conventional Savings dividend of 5.8% to 6.3% is already competitive without compromising financial discipline.

Cautious Outlook for the Final Quarter

Despite the strong start to the year, Samirul noted that EPF has signalled a more cautious stance heading into the fourth quarter.

Global equity valuations remain elevated, and EPF has reportedly accelerated profit-locking measures. This suggests the fund does not expect year-end market conditions to be as favourable as those seen earlier in the year.

Comparisons With ASB Should Be Treated Carefully

Recent stable dividend announcements from Amanah Saham Bumiputera, or ASB, have supported positive market sentiment. However, Samirul cautioned against drawing direct comparisons.

Unlike ASB, EPF has far greater exposure to global markets, foreign exchange movements, geopolitical risks, and international interest rate cycles. As a result, ASB’s performance should be viewed as a supportive signal rather than a direct indicator of EPF dividends.

Historical Context for EPF Dividends

Over the past five years, EPF dividend rates have remained within a relatively narrow range. Conventional Savings stood at 5.20% in 2020, rose to 6.10% in 2021, eased to 5.35% in 2022, increased to 5.50% in 2023, and reached 6.30% in 2024. Shariah Savings ranged from 4.90% in 2020 to 6.30% in 2024, matching the Conventional rate last year.

This historical pattern provides context for why the projected 2025 range is seen as consistent rather than exceptional.

How the Outlook Affects Contributors

For contributors, the expected dividend range points to steady returns rather than a big jump or drop in payouts. Although EPF’s investment income has been strong, dividends are not based on market performance alone. The fund also has to manage risks carefully and keep enough reserves for future years.

This helps explain why strong investment numbers do not always lead to higher dividends. Some gains are only on paper and may change with market or currency movements, so they cannot be paid out straight away.

The difference between Conventional and Shariah Savings is also not new. It comes from how each fund is allowed to invest, not from short-term performance. Over time, the gap tends to remain small.

Overall, the outlook suggests a dividend that is in line with past years. It reinforces EPF’s role as a long-term retirement savings fund, focused on stability and sustainability rather than chasing higher payouts in any single year.

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