THE Employees Provident Fund (EPF) has declared a 6.15 per cent dividend for both Conventional and Shariah Savings for the 2025 financial year, marking a modest retreat from the 6.30 per cent distributed in 2024 as global currency movements and softer equity growth tempered returns.
The marginal decline comes amid a strengthening ringgit and a more measured performance on domestic bourses, developments that economists say have narrowed the fund’s investment income despite signs of improvement in the wider economy.
Dr Barjoyai Bardai observed that while contributors had hoped for a repeat of last year’s performance, the fund was contending with significant structural pressures.
“Many contributors had hoped the EPF would maintain last year’s 6.3 per cent dividend,” he said.
“However, the fund is currently facing two significant challenges.”
He explained that roughly 45 per cent of the EPF’s investment portfolio is denominated in US dollars. The appreciation of the ringgit, though broadly positive for the national economy, has reduced the local currency value of foreign assets.
“When the US dollar weakens, the value of those investments declines when converted into ringgit terms, which compresses overall investment income,” he explained.
At the same time, more than half of the EPF’s domestic investments are channelled through the stock market.
Although the benchmark composite index recorded gains in 2025, the pace of growth was more subdued than in 2024, limiting the fund’s ability to sustain a higher dividend.
Even so, Dr Barjoyai struck a cautiously hopeful note, pointing to ongoing restructuring of the EPF’s investment strategy that could bolster returns in 2026, subject to more favourable market conditions.
Employers broadly endorsed the outcome.
The Malaysian Employers Federation described the 6.15 per cent dividend as reasonable and competitive given elevated global interest rates, persistent geopolitical tensions and continued volatility across international markets.
In a statement, the federation said a payout exceeding six per cent underscored the resilience of the EPF’s investment management and reinforced confidence in Malaysia’s mandatory retirement savings framework.
It stressed that the fund’s strategy remains aligned with its long-term mandate, prioritising capital preservation and sustainable returns for members.
While acknowledging the dip from 6.30 per cent in 2024, the federation warned that global market normalisation, higher financing costs and ongoing international volatility could weigh on future performance.
“Strong returns cannot substitute for sustainable contribution levels,” MEF said, urging policymakers to prioritise long-term retirement adequacy, particularly after several special withdrawal schemes introduced in recent years.
The federation added that any proposal to raise mandatory contribution rates must take into account employers’ operating costs, business sustainability and prevailing economic conditions.
Nevertheless, it congratulated the EPF’s management, stating that maintaining a competitive return amid domestic and international uncertainty reflected prudent investment strategies, balanced diversification and effective risk management.
From the small business sector, Teh Kee Sin, founding president of the SME Association of South Johor, characterised the dividend as broadly in line with recent years, albeit slightly below expectations of around 6.5 per cent among some small and medium-sized enterprises.
“It is a slight setback, but overall EPF has remained consistent over the past few years,” he said.
Teh called for greater flexibility in permitting withdrawals from Account 2, particularly for business owners seeking to reinvest in their enterprises or undertake upskilling initiatives.
He argued that carefully controlled withdrawals could support expansion, workforce training and reskilling as SMEs adapt to rapid technological change, including artificial intelligence and digital tools.
He also pointed to the potential spillover effects of the dividend distribution on consumer confidence. Stronger returns, he suggested, could enhance contributors’ sense of financial security and stimulate spending, especially during the festive season.
“If SMEs are strategic and proactive, they can channel this opportunity into injecting more cash flow into their businesses,” he said. - March 1, 2026
