Employees Provident Fund (EPF) members should have a say if dividends are changed to a tiered structure, said Tunku Alizakri Alias. The now-former CEO of EPF made this statement in response to a question of whether the EPF is considering tiered dividends to give members with lower savings an added advantage.

“Tiered dividend is a very complex structure, it has both its pros as well as its disadvantages. We [the EPF] have always operated from an ‘everybody gets the same dividend’ base philosophy,” said Tunku Alizakri during the virtual media conference at the announcement of the EPF’s 2020 dividend.

Tunku Alizakri continued, “Tiered dividend would actually suggest that there will be ways for us to go and deliver our dividends to our members in very different ways in the future, so again, this is a very complex issue and this is something that the EPF will have to go and touch base with our members at the end of the day because our members need to have a say in how the dividends that they will be receiving in the future should be structured.”

Here’s an example of how tiered dividends would work in practice – every EPF member would receive a higher dividend rate for the first RM50,000 of their savings, but get progressively lower rates for the next RM50,000 or RM100,000. Therefore, tiered dividends would pay a higher effective dividend rate to those with lower total savings overall, as those with savings above a certain predetermined threshold would get a lower rate for that amount.

Regardless of any possible changes to the dividend structure of the EPF in the future, Tunku Alizakri reassured members that the EPF would remain the best option when it comes to retirement funds. “I would like to think that you will also get the best returns for the type of fund you will be putting your retirement fund in, so rest assured EPF is still the place for your retirement future,” he said, adding that EPF savings would always be managed in the “best way possible by the best investment team possible.”

For the year 2020, the EPF declared a 5.2% dividend for its Simpanan Konvensional and 4.9% for Simpanan Shariah – better rates than expected given the challenging economic climate of Covid-19.

(Source: The Edge Markets)

• TAGS:
• Employees Provident Fund (EPF)
• EPF
• EPF Dividends
• EPF Dividends 2020
• Tiered Dividends
• Tunku Alizakri Alias