EPF dividends not low based on current economic developments

05 Mar 2023 10:49am
Photo for illustrative purposes. - Bernama PIC
Photo for illustrative purposes. - Bernama PIC

SHAH ALAM - The Employees' Provident Fund (EPF) dividend rates for 2022 is not low considering current stock market and economic situation.

Economist Dr Nungsari Ahmad Radhi said the dividend of 5.35 per cent for conventional savings and 4.75 per for shariah savings were much better than expected.


He stated that given that the EPF investment company's profits were low and the stock market closed below its level at the start of the year, the dividends were lower than they were the previous year.

He added that the increase in interest rates caused prices to fall, factoring in bonds or sukuk.

"EPF invest in two types of assets: equity in companies through the stock market and debt instruments such as bonds or sukuk.

"I don’t think it's low. My estimation was five per cent. The percentage announced was much higher than my expectations," he told Sinar on Saturday.

Nungsari said even though EPF had investments in property, the returns were dependent on the country’s economic activity.

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"That is why the announcement of 5.35 per cent is great when compared to the market or the economy in 2022," he explained.

He said the EPF withdrawal which was allowed by the previous administration was not the reason dividends decreased.

He explained that the withdrawal of over RM140 billion has reduced the funds managed and been effective in diversifying the portfolio.

"There may be an early liquidation of the investment to meet withdrawals, but it is not significantly affecting the portfolio’s dividend.

"Those affected were the ones who withdrew their retirement funds," he said.

Nungsari was confident that the EPF will continue to grow if it is not misused.

"Don’t politicise the EPF. Do not interfere in its decision or place unqualified people to manage and administer it," he said.

Malaysian Pacific Research Centre Singapore Principal Advisor and International Affairs Institute Senior Fellow Dr Oh Ei Sun said there were two factors causing the low dividend rates.

Oh explained that it was caused by the constant EPF withdrawals by contributors in the past three years to maintain their spending due to Covid-19.

"The withdrawals have significantly depleted EPF investment funds," he said.

Oh added the other reason was that EPF invested in businesses that did not perform well during the Covid-19 pandemic.

"These two factors are the reason why the dividends are lower compared to the previous year," he said.

He hoped the economic recovery done by the unity government under Prime Minister Datuk Seri Anwar Ibrahim could reduce EPF withdrawals and businesses investments could continue to grow.

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