Employment Provident Fund (EPF) declared a dividend rate of 6.1% for Conventional savings 2021 on 2 March 2022 with a payout of RM 50.5 billion. For Syariah savings 2021, EPF declared a dividend rate of 5.65%. The payout for this amounts to RM 6.30 billion.
How was the EPF dividend rate in the preceding years?
EPF | Dividend rate for Conventional Savings | Dividend rate for Syariah Savings |
2020 | 5.20% | 4.90% |
2019 | 5.45% | 5.00% |
2018 | 6.15% | 5.90% |
2017 | 6.90% | 6.40% |
Despite the pandemic and economic doom, EPF reflected a strong performance in 2021. Hence, 2022 sees a total payout for 2021 amounting to RM 56.8 billion; an all-time high payout.
What type of investment contributed to such high performance in 2021?
EPF said they rebalanced the investment portfolio in 2021 by acquiring shares that had fundamentally strong and attractive prices. They also capitalised on overseas investment which brought 56% of their overall return for the year.
Out of total investment, 45% comprised fixed income instruments, 44% went to equities, 6% was invested in real estate and 5% included money market instruments.
How will the EPF withdrawal impact the retirement savings of Malaysians?
Previously, the government allowed EPF withdrawal savings via a series of initiatives, namely:
- i-Sinar
- i-Citra
- i-Lestari
The final EPF withdrawal is declared on 1 March 2022. However, with the implementation of this last withdrawal, 48% of EPF members will now have less than RM 10,000 in their account for withdrawal. This was due to the RM 101 billion that had been withdrawn earlier to cope with the pandemic crisis.
Ahmed Bardi Mohd Zahir, EPF Chairman, addresses the issue saying, “With an average three-year real dividend after adjusting for inflation of 4.91% for Conventional savings and 4.51% for Syariah savings, the EPF had surpassed its strategic target of declaring an average real dividend of at least 2% on a rolling three-year basis.”
However, Badri is hopeful that given the recovering economy, EPF would increase investment in 2022. They would focus on the domestic financial market to boost economic activity and contribute to further economic recovery.
Besides, Badri expressed that the recent dividend and EPF’s ongoing performance will help them rebuild the retirement savings of EPF members gradually.
Why does the Government believe the recent EPF withdrawal is a timely and necessary step?
During the debate on the Royal Address in Dewan Rakyat, Datuk Seri Mohd Salim Sharif (BN-Jempol) stated the EPF withdrawal is allowed to meet the urgent needs of Malaysians to ease their survival.
“This is not to deny the government’s concern over the issue of contributors’ insufficient retirement savings, but to meet the needs of Keluarga Malaysia, especially those who are still struggling to recover from the Covid-19 pandemic or the recent floods,” he said.
Datuk Dr Xavier Jayakumar (Independent-Kuala Langat) supports the decision for EPF withdrawal. He suggests this is a timely step to help boost the nation’s economic recovery.
However, Datuk Seri Hasan Arifin (BN-Rompin) cautioned when people receive financial assistance via EPF withdrawal, the government should closely monitor and inspect that traders do not increase the price of goods, especially in rural areas.
He said that if prices of goods increase, the purchasing power of people will reduce. This would diminish the purpose for which the withdrawal was allowed in the first place.
Both conventional and Syariah savings accounts will be credited for dividends on Sunday, 6 March 2022. Members can check their balance via EPF’s i-Akaun online or via account statement from EPF kiosks nationwide.