Vaccine rollout, global immunity to shape 2021 dividends
KUALA LUMPUR: The Employees Provident Fund’s (EPF) dividends this year are dependent on market performance, vaccine rollout and global Covid-19 immunity.
Outgoing chief executive officer Tunku Alizakri Raja Muhammad Alias said the dividends had always been dependent on the market performance, which could hinge on the efficacy of the Covid-19 vaccine and its take-up rate, as well as the herd immunity at the global level.
“At this point in time, it is still early. We are not certain how the market will perform in 2021,” he said at a virtual briefing on EPF’s dividends for both conventional and shariah savings for 2020 yesterday.
Tunku Alizakri assured EPF members that their retirement savings were in the best of hands, supported by the fund’s investment team with strong governance processes of risk-return profile.
“We will always take advantage of the ups and downs of any part of the market. We will take profit and go into the market when it is the right time,” he said at his last conference with the media as the CEO of the country’s largest pension fund since Aug 20, 2018.
Former Tenaga Nasional Bhd president and CEO Datuk Seri Amir Hamzah Azizan will succeed Alizakri effective tomorrow.
Tunku Alizakri said EPF had structured its investment portfolio based on strategic asset allocation (SAA) and risk-return profile.
“Taking into cognisance there might be some form of liquidity pressures from i-Sinar and iLestari, there was a conscious decision from our side to have a higher allocation in cash,” he said in response to EPF’s preparation for its investment portfolio in anticipation of higher withdrawal by members, following the removal of the conditions of the iSinar facility.
On the possibility of tiered dividends in the future, Tunku Alizakri said this method was a complex structure with pros and cons.
“EPF always operates where everybody gets the same dividend. (The idea of) Tiered dividend suggests ways to deliver dividends to our members in different ways in the future.”
He said EPF would have to touch base with members on how they prefer to receive future dividends and how the method should be structured.
“No matter how the dividend structure will be in the future (single or tiered), members’ savings will be managed in the best way possible by the best investment team for the best type of returns for the type of funds they put in their retirement money.”
EPF chairman Tan Sri Ahmad Badri Mohd Zahir said the vaccine rollout this year would have an important bearing on the outlook for the year, following new strains of Covid-19 that are easily transmitted.
“However, we believe that the situation is well managed, with governments everywhere ensuring that the vaccines get to people as efficiently as possible.
“In Malaysia, the first batch of vaccines has arrived and will soon be administered to the population.”
Being a 70-year-old institution and one of the oldest pension funds in the world, EPF would remain focused on its mandate to help members have enough savings for a sustainable retirement, he added.
“We will also embark on a new withdrawal scheme to allow members to purchase insurance or takaful products that were announced in the 2021 Budget, slated for the end of the year.”
EPF was the first institutional investor to establish the largest shariah-compliant private equity co-investments mandate in the world, with the launch of the US$600 million Shariah Private Equity Co-Investment Separate Managed Account.
“This certainly bodes well for our shariah savings fund, in which members’ savings balance has crossed the RM100 billion mark and continues to grow sustainably,” Ahmad Badri said.
To date, 1.12 million EPF members have opted for the shariah savings, launched in 2016 to meet the demands of members to have their savings managed and invested according to shariah principles.