The Employees Provident Fund (EPF) is expected to distribute a lower dividend rate for 2022, said several economists. This is following the provident fund’s latest announcement of a weaker total investment income during the first quarter of 2022 (1Q22), as compared to the first quarter of the previous year.

The EPF had recently reported that its total investment income for 1Q22 had dipped to RM15.85 billion, from RM19.29 billion in 1Q21. This is attributed to a significant downturn in global markets.

“EPF’s dividend rate is expected to fall in tandem with lower investment income,” economics professor at Sunway University, Professor Yeah Kim Leng commented with regard to this development.

Professor Yeah also hinted that the outlook moving forward may be slightly gloomy, given that the global economic growth is expected to slow down due to various factors. These include the likelihood of the Russia-Ukraine war being prolonged, as well as inflation and interest rate hikes by major central banks around the world. The risk of recession also looms as the US struggles with high inflation.

“If it [the EPF] can navigate a soft landing, and China is able to resume normal activities amid its zero-Covid policy, we may see investment income holding up to enable a decent dividend, which most likely will be lower than the previous year,” Professor Yeah further said.

Economics professor from Malaysia University of Science and Technology (MUST), Professor Geoffrey Williams also shared a similar opinion; he believes that the EPF will not be able to replicate its performance last year in 2022.

Professor Williams explained that the EPF’s overall dividend performance in 2021 was supported by a strong rebound in the equity markets. “But 2022 growth is already being downgraded across the world, so investment returns are likely to be lower,” he said, adding that the EPF’s Q12022 outcome was unsurprising given the general market turbulence.

Last year, the EPF announced a dividend rate of 6.10% for Simpanan Konvensional, and 5.65% for SImpanan Shariah. The total payout stood at RM50.45 billion and RM6.27 billion, respectively.

(Source: The Star)

• TAGS:
• Dr Geoffrey Williams
• Dr Yeah Kim Leng
• Employees Provident Fund (EPF)
• EPF
• EPF Dividends
• Geoffrey Williams