EPF declares respectable 5.2% dividend for pandemic-hit 2020
Pension fund’s 2020 payout is 3.9 per cent higher than 2019’s RM45.82 billion
THE Employees Provident Fund (EPF) has declared a dividend of 5.20 per cent for conventional savings and 4.90 per cent for shariah savings in pandemic-hit 2020.
The pension fund said this would involve a total payout of RM47.64 billion, RM42.88 billion of which was for conventional savings and RM4.76 billion for shariah savings.
The dividends were slightly lower than the 5.45 per cent for conventional savings and 5.0 per cent for shariah savings declared for 2019.
However, the total payout for 2020 was 3.9 per cent higher than 2019’s RM45.82 billion, which consisted of RM41.68 billion for conventional savings and RM4.14 billion for shariah savings.
EPF said it would need RM8.25 billion to pay out every one per cent in dividend for conventional savings and RM972 million for every one per cent in dividend for shariah savings in 2020.
With an average five-year real dividend of 4.62 per cent for conventional savings and 4.32 per cent for shariah savings after adjusting for inflation, EPF said it had exceeded its strategic target of declaring at least two per cent real dividend on average for a rolling five-year basis.
Chairman Tan Sri Ahmad Badri Mohd Zahir said EPF had managed to safeguard its members’ retirement savings well while meeting its immediate needs to deal with current challenges.
“It was not easy at times, as we had to walk a tightrope in ensuring that our members survive the difficult times while balancing their future needs.
“The quick spread of Covid-19 and its transmissibility made it a Black Swan event that many found challenging to manage. However, we were proactive in managing the pandemic and that helped us to ride through the challenges.
“Our focus on digitalisation enabled us to assist our members more efficiently and seamlessly, while ensuring that we remain relevant to members who are more technology-savvy,” he said in a statement yesterday.
Ahmad Badri said EPF’s speed of adaptability in its investment strategy and processes ensured that it was able to deliver optimum performance, while leveraging the strength of its 250strong investment professionals, who diligently managed portfolios and took proactive measures.
“Solid teamwork and digital infrastructure ensured that we could adapt seamlessly to the new work norms.”
The EPF membership base rose two per cent to 14.89 million, while employers registered with the fund stood at 534,398 last year.
EPF’s overall investment assets last year grew 7.9 per cent to RM998 billion from RM924.75 billion in 2019, with the market value hitting RM1.02 trillion at the end of last year.
The fund said it had rebalanced its investment portfolios based on thorough consideration of how Covid-19 and global uncertainties, such as the Unit- ed States presidential election in November last year, the US-China trade dispute and the impact of the Brexit negotiations had influenced capital markets worldwide.
EPF recorded its highest-ever gross investment income of RM60.98 billion, with RM6.15 billion allocated to shariah savings.
The strong performance was due to the prudent approach guided by the EPF’s overall strategic asset allocation, which kept it resilient despite the unanticipated crisis.
By asset class, EPF said fixedincome instruments made up 46 per cent of investments, and equities comprised 42 per cent. Real estate and infrastructure, as well as money market instruments made up five per cent and seven per cent respectively.
Ahmad Badri said EPF would remain steadfast with its diversification programme across asset classes, strategies, managers, markets, countries and currencies.
“The contribution from the overseas assets was also critical to our performance,” he added.
Up to December last year, overall EPF investment assets outside of Malaysia across all asset classes accounted for 33 per cent.
Equities, particularly foreign equities, continued to be the driver of returns with a total income of RM28.71 billion.
The private equity portfolio also demonstrated strong performance with consistent income distribution.
While leading stock indices lost as much as 40 per cent in the first quarter, EPF took the opportunity to rebalance its portfolio by acquiring shares that were fundamentally strong at attractive prices.
The recovery in the second half of last year, on the back of improved global and domestic markets, also contributed significantly to EPF’s investment portfolios, providing profit-taking opportunities particularly in the fourth quarter.
EPF wrote down RM7.71 billion of its listed equity portfolio to ensure its long-term investment portfolios remained healthy.
During the year, EPF introduced several withdrawals facilities, namely i-Lestari and iSinar, which required a robust liquidity plan.
Hence the money market portfolio grew significantly to cater for the withdrawals. The income from this portfolio came in at RM1.19 billion.
With almost half the fund’s total asset allocation in fixed-income instruments, comprising Malaysian government securities and the equivalent, as well as loans and bonds, EPF was able to maintain stable returns and capture opportunities to realise profit as interest rates declined. Income from the portfolio came in at RM25.42 billion, or 42 per cent of the fund’s total gross income.
The real estate and infrastructure portfolio’s income of RM5.66 billion came with its own set of challenges, with lockdown and work-from-home measures, resulting in lower income from certain segments of the real estate sector.