EPF declares highest dividend payout since 199
By LUQMAN ARIF - February 10, 2018 @ 5:26pm
KUALA LUMPUR: The Employees Provident Fund (EPF) today declared a dividend rate of 6.90 per cent for Simpanan Konvensional (conventional savings) 2017, with payout amounting to RM44.15 billion.
The payout for conventional savings is the highest since 1997.
The fund also declared a 6.40 per cent dividend for Simpanan Syariah (Syariah savings) 2017, with payout amounting to RM3.98 billion.
In total, the payout for 2017 amounts to RM48.13 billion, an increase of 29.8 per cent from 2016.
EPF Chairman Tan Sri Samsudin Osman said he was pleased with the overall performance in 2017, which is also a landmark year for the EPF as it is now managing two savings schemes and declaring two dividend rates.
“Simpanan Shariah has shown a strong performance considering that this is its first dividend declaration. This reaffirms the strength and health of EPF’s shariah asset and should come as good news to our members who have switched to Simpanan Shariah.
“As for Simpanan Konvensional, the 6.90 per cent was the highest rate ever announced since 1997,” he said in a statement today.
The dividend payout for each account was derived from total gross realised income for the year after deducting the net impairment on financial assets, unrealised losses due to foreign exchange rate and derivative prices, investment expenses, operating expenditures, statutory charges as well as dividend on withdrawals.
Simpanan Shariah derived its income solely from its portion of Shariah assets while for Simpanan Konvensional, a total of 38 per cent of the income was generated by its share of Shariah assets and 62 per cent from non-Shariah assets.
The Employees Provident Fund (EPF) today declared a dividend rate of 6.90 per cent for Simpanan Konvensional (conventional savings) 2017, with payout amounting to RM44.15 billion; and 6.40 per cent for Simpanan Syariah (Syariah savings) 2017, with payout amounting to RM3.98 billion. Pic by NSTP/SALHANI IBRAHIM
Gross investment income for 2017 was RM53.14 billion, the highest since the EPF’s establishment in 1951. Of the amount, a total of RM4.60 billion was attributed to Simpanan Shariah, proportionate to its share of total Shariah assets while RM48.54 billion was attributed to Simpanan Konvensional.
The returns for Simpanan Konvensional were enhanced by the income generated from non-Shariah investments following the outperformance of global banking stocks, while Simpanan Shariah does not include conventional banking stocks due to their non-Shariah compliant status. In addition, equity impairments from Shariah-compliant stocks, particularly the oil and gas, and telecommunication counters, lowered the income of the EPF’s Shariah portfolio.
Samsudin noted that there will always be a deviation in Simpanan Shariah returns from Simpanan Konvensional in the short-term. However, he said the returns are expected to be similar over the long-term as both share the same investment objectives and strategies.
“As a retirement fund, our objective is to preserve and enhance the value of our members’ retirement savings and this can be measured by looking at our declared dividend rates against Malaysia’s inflation rate.
“For 2017, the dividend rates declared for Simpanan Shariah and Simpanan Konvensional were 2.61 per cent and 3.11 per cent respectively over inflation rate of 3.79 per cent. For the past three years, the EPF has declared a rolling three-year real dividend of 3.51 per cent and 3.67 per cent respectively, which exceeded our strategic target of two (2) per cent real dividend,” he said.
On the RM48.13 billion dividend 2017 payout, Samsudin said the amount needed to pay one (1) per cent dividend was RM7.02 billion, in tandem with the annualised growth of members’ savings of 10.98 per cent since 1990. As at December 31, 2017, total members savings amounted to RM768.51 billion, of which RM67.76 billion was under Simpanan Shariah and RM700.75 billion under Simpanan Konvensional.
He said this is a challenge that goes into managing a large fund like the EPF as it needs to generate consistent and sustainable returns for the long run.
“This is partly the reason why we need to diversify into overseas markets as the increase in global asset value helps us realise sizeable gains from different markets and asset classes, which contributed to the overall performance,” said Samsudin.
The RM53.14 billion in 2017 gross investment income increased 14.13 per cent from RM46.56 billion in 2016. The amount has been growing annually at 11.90 per cent since 2007, and is equivalent to a gross return on investment (ROI) of 7.30 per cent.
Samsudin said EPF’s investments had been delivering a three-year annualised ROI of 7.30 per cent, which was commendable given the EPF’s nature as a balanced fund with exposure in fixed income instruments of about 50 per cent.
“On that note, I would like to congratulate the EPF team for this outstanding performance to ensure that our assets grow at healthy levels in line with EPF’s vision to help members achieve a better future and their savings and interest are continuously safeguarded.”
The crediting of the 2017 Dividend will be made on Sunday, February 11, 2018, and members can check online via EPF website at www.kwsp.gov.my or through i-Akaun mobile app. The i-Akaun mobile app is available for download via the Google Play Store or Apple App Store.
Members who wish to switch to Simpanan Shariah 2019 may do so by registering before December 25, 2018.
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