EPF declares 5.35% dividend for conventional savings, 4.75% for shariah savings

The Employees Provident Fund (EPF) has declared a dividend rate of 5.35% for conventional savings for 2022, with a total payout of RM45.44 billion. 

EPF CEO Amir Hamzah Azizan also announced a  4.75% dividend for shariah savings with total payout of RM5.70 billion for 2022. 

This brings the total payout amount for 2022 to RM51.14 billion.

Amir said the competitive returns were largely due to EPF's overarching strategy which emphasises long-term sustainability of investments and returns, in line with its strategic asset allocation. 

"The fund’s well-diversified portfolio and healthy liquidity helped to reduce risk and enabled it to maintain investment assets at above RM1 trillion and deliver respectable dividend rates for 2022. 

"The RM51.14 billion payout will benefit more than 15 million EPF members, which include members from the informal sector who are registered under i-Saraan, an incentive-based voluntary contribution programme," he said during the EPF 2022 financial performance media briefing in Shah Alam today.

Amir said he believed that the EPF members’ retirement savings would benefit from the dividend and its consistent performance, especially when viewed from a long-term perspective. 

"Notwithstanding the economic situation, we will continue to prioritise the long-term success of our investment portfolio and the rebuilding of our members’ retirement savings," he added.

As of Dec 31, 2022, the EPF had recorded a lower total gross investment income of RM55.33 billion compared with RM68.89 billion in 2021, driven by high market volatility and lower valuations across equity and fixed income markets.

Amir said the financial year 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. 

"Geopolitical instability was also a major factor in driving market gyrations, with the Russian invasion of Ukraine causing a major dislocation in commodity prices, compounded by sabre-rattling between the US and China," he said.

In 2022, the equities asset class contributed RM30.54 billion, or 55% of the EPF’s total gross income, lower than the RM41.06 billion recorded in 2021. 

Foreign listed equities, which yielded a return on investment (ROI) of 9.27%, continued to be the driver of returns for this asset class.

"The private equity portfolio also demonstrated strong performance, recording an ROI of 13.65%.

"This portfolio generated lower gross investment income compared to 2021, largely due to lower valuations of the underlying assets, apart from lower distributions received for the year," he said. 

Amir said to ensure long-term portfolio health, the fund had taken the measure of writing down RM3.43 billion of its listed equity portfolio in 2022, higher than the RM1.15 billion write down recorded in 2021, in line with the volatility in the equity markets. 

A total of 74% of the total amount came from shariah-compliant counters that underperformed, which in turn impacted the EPF’s shariah savings performance for the year.