EPF declares dividend of 6.10% for 2021, above pre-pandemic 2019
KUALA LUMPUR (March 2): The Employees Provident Fund (EPF) declared a 6.10% dividend for conventional savings and 5.65% dividend for shariah savings for 2021 — beating the 5.45% (conventional) and 5% (shariah) declared in pre-pandemic 2019.
Total dividends declared hit a new all-time high of RM56.72 billion (RM50.45 billion conventional and RM6.27 billion shariah) despite unprecedented Covid-19-related withdrawals hitting growth in its fund size, beating the previous all-time high of RM48.13 billion in 2017. Total distributable income was RM57.1 billion (RM50.8 billion conventional and RM6.3 billion shariah), EPF’s presentation slides showed.
The Edge had in mid-January estimated that the EPF’s dividend rate would be above 2019’s 5.45% and could even exceed 6% for 2021 based on the fund’s performance in the first nine months of 2021. The Edge had also said that the EPF’s absolute dividend payout was poised to hit a new all-time high, with net investment income for the first nine months of 2021 of RM47.67 billion (RM48.02 billion gross) being already more than the RM47.64 billion dividend paid out to EPF members in 2020.
The EPF’s 2021 dividend rate is not only significantly higher than 2020’s rate of 5.2% and 4.9% but also tops the five sen per unit income distribution by Permodalan Nasional Bhd’s flagship Amanah Saham Bumiputera (ASB) for 2021.
According to the EPF, its overall investment assets grew to RM1.008 trillion in 2021, up 0.8% year-on-year from RM1 trillion in 2020. In February 2021, the EPF said its overall investment assets grew 7.9% to RM998 billion from RM924.75 billion in 2019.
The significantly slower growth in its total investment assets, despite strong investment performance, was owing to Covid-19-related withdrawals, including the unprecedented i-Sinar Account 1 withdrawals totalling RM58.7 billion. The Edge last year noted that the EPF could experience its first net withdrawal, where the amount of funds deposited into the EPF is less than total withdrawals for the year.
Some 7.3 million EPF members had applied for at least one or all three of the Covid-19-related special withdrawals — i-Lestari, i-Sinar and i-Citra — that collectively saw RM100.9 billion withdrawn from the EPF between April 2020 and February 2022, EPF data show. The amount not saved with the EPF rises to RM110 billion when including the RM9 billion that was released to members because of the reduction in employees’ statutory contribution rate (from 11% to 7% from April to December 2020, and from 11% to 9% from January 2021 to June 2022).
The EPF had previously said the withdrawals severely eroded retirement savings for a sizeable group of members. Around 6.1 million members had less than RM10,000 in their EPF accounts, out of which 3.6 million had less than RM1,000, the EPF said in a statement dated Dec 28, 2021. That's severely short of the EPF's basic recommended savings of RM240,000, which works out to only having RM1,000 a month for 20 years after retirement, the provident fund said. The EPF added that the number of aged persons needing government assistance are expected to increase rapidly from 3.5 million in 2021 to 5.3 million (15% of population) by 2030 and 7.4 million (21% of population) by 2042.