KUALA LUMPUR – The Employees Provident Fund (EPF) announced a dividend rate of 6.10% for conventional savings and 5.65% for shariah savings for 2021.
The pension fund said the total dividend payout amounts to RM56.72 billion, of which RM50.45 billion is for conventional savings and RM6.27 billion for shariah savings.
EPF chairman Tan Sri Ahmad Badri Mohd Zahir said EPF had managed to keep it steady for the year 2021 and remained resilient, due in part to its healthy and globally diversified portfolio.
“The RM101 billion pandemic-related withdrawals since the year 2020 had resulted in 48% of EPF members having less than RM10,000 in their accounts.
"We hope that these dividends and our continued performance will help us begin the process of rebuilding our members’ retirement savings, as economic recovery takes shape over the course of the year,” said Badri.
He added that the primary concern with the withdrawals was the impact on members’ retirement adequacy.
However, he said, despite the challenge of managing liquidity in the face of these outflows, EPF had the capability and agility to respond with minimal impact to the financial market.
For the record, the total payout for the year 2021 has beat the previous all-time high total payout of RM48.13 billion in 2017.
It also surpassed 2020’s 5.2% for conventional savings and 4.9% for shariah savings.
“The crediting of dividends for both Simpanan Konvensional and Simpanan Shariah will be completed this Sunday, March 6. Members may check their accounts via i-Akaun or get their statement from EPF kiosks nationwide.”
Investment portfolio in 2021
For 2021, EPF rebalanced and managed its investment portfolios by acquiring shares that were fundamentally strong at attractive prices, as well as capitalising on its overseas investments, which contributed 56% to its overall returns.
As at December 31, 2021, EPF recorded an increase of 6% in total gross investment income to RM67.06 billion from RM63.45 billion in 2020, driven by the progressive recovery of the equity markets and most asset classes amid the global rebound.
“For 2021, EPF recorded its first ever negative net contribution (contributions after withdrawals) in 20 years of RM58.2 billion, but remained steadfast and prudent in its long-term investment strategies, while adapting to challenges to ensure long-term sustainable returns.
“EPF recorded a gross investment income of RM67.06 billion, with RM6.91 billion allocated to shariah savings,” the statement read.
The performance was attributed to EPF’s diversification approach as guided by its strategic asset allocation, which has kept the fund resilient to financial shocks and remain stable in unprecedented situations.
By asset class, fixed-income instruments made up 45% of investments, while equities comprised 44%. Real estate and infrastructure as well as money market instruments made up 6% and 5% of EPF assets, respectively.
“The continued market recovery in 2021, particularly in the developed markets, contributed to EPF’s listed equity portfolios, providing opportunities for it to realise profits.
“Equities, particularly foreign listed equities, which recorded a return on investment (ROI) of 10.44%, continued to be the driver of returns.
“Total income contributed by the equity asset class was RM38.93 billion, or 58% of EPF’s total gross income.”
Meanwhile, the equity portfolio also demonstrated strong performance, an ROI of 19.01%.
To ensure long-term healthiness, EPF took prudent measures to write down RM1.15 billion of its listed equity portfolio in 2021, which was lower than the RM7.71 billion writedown recorded in 2020, in line with the broad recovery in the equity markets.
With almost half of EPF’s total asset allocation in fixed-income instruments, comprising Malaysian government securities and the equivalent, as well as loans and bonds, the retirement fund was able to maintain steady returns.
“Income from the portfolio contributed RM19.50 billion, or 29% of EPF’s total gross income.”
In addition, the real estate and infrastructure portfolio’s income of RM7.69 billion continued to play a role as a hedge against inflation, recording an ROI of 6.53%, a spread of 1.84% above the ROI for fixed-income instruments of 4.69%, whereas income from money market instruments came in at RM0.94 billion.
According to EPF, its overseas assets were critical contributors to its overall performance, where different asset classes, markets, and currencies provided income stability and added value to the retirement fund’s overall return.
“As at December 2021, about 37% of EPF’s investment assets were outside of Malaysia across all asset classes.”
It said that the overall investment assets grew 0.8% to RM1.01 trillion from RM1 trillion in 2020.
As at December 2021, its membership base grew by 2% to 15.2 million, while employers registered with EPF stood at 553,000.
With an average three-year real dividend after adjusting for inflation of 4.91% for conventional savings, and 4.51% for shariah savings, EPF had surpassed its strategic target of declaring an average real dividend of at least 2.00% on a rolling three-year basis.
Increasing investment in various domestic asset classes in 2022
Moving forward, EPF believes that the reopening of economies and businesses, as well as various initiatives under the National Economic Recovery Plan, would provide fertile ground for EPF to increase its investment efficiencies and leverage on the opportunities that a recovery brings.
To that end, it said that it will be increasing investment in the various domestic asset classes in 2022.
As a major investor in Malaysia’s financial markets, this would also help catalyse economic activity and assist in the ongoing recovery of the economy.
EPF’s internal data is already showing that the labour market is returning to health, with contribution data, member registrations, and active employers all returning to pre-pandemic levels in the fourth quarter of 2021, it added.
With international borders set to reopen and vaccination rates among the best in the world, Malaysia is poised for a rebound in 2022. – The Vibes, March 2, 2022
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