KUALA LUMPUR: The Employees Provident Fund (EPF) is well-positioned to declare higher dividends of at least 6.2 per cent for 2024, buoyed by the recovery in both global and domestic markets, according to industry experts.
They noted that the fund has benefitted from improved market conditions, a stronger ringgit, and higher returns from fixed-income assets.
"A realistic range for EPF dividends for conventional savings would be 5.8 per cent to 6.2 per cent, while Shariah-compliant savings could be 5.4 per cent to 5.6 per cent," said Universiti Putra Malaysia head of social and development sciences at the Faculty of Human Ecology Assoc. Prof. Dr. Nik Ahmad Sufian Burhan.
"The 10-year average for EPF dividends is around 6 per cent, so a return in this range seems reasonable. If market conditions remain strong, we could see a figure above 6 per cent, but a more conservative estimate puts it at 5.8 per cent to 6.2 per cent," he told Business Times.
He said the main contributor to the higher dividends will be the fund's high investment income.
EPF's diverse portfolio has positioned the fund to benefit from the recovery in both global and local markets.
"Bursa Malaysia has performed well, and international investments, particularly in the United States and Europe, have yielded favourable results. Malaysia's economic recovery also has an impact.
"Last year, the Malaysian economy expanded by 5.3 per cent in the third quarter of 2024, driven by strong private-sector investment, continued improvement in exports, and robust domestic demand. A stronger ringgit has also helped to reduce losses on foreign investments.
"Another important factor is higher returns on fixed-income assets. Interest rates have remained stable, making bonds and sukuk more appealing. EPF's heavy investment in these has resulted in higher and more stable yields," he said.
Another factor that will result in higher dividends by EPF is its active fund management.
Sufian added the fund shifted towards high-return investments while reducing exposure to weaker sectors.
"Its expansion into real estate and infrastructure projects has also contributed to long-term steady returns."
Bank Muamalat Malaysia Bhd chief economist Dr. Mohd Afzanizam Abdul Rashid said EPF's gross investment income has grown 20 per cent between January and September last year.
"Additionally, the global equities markets have generally posted double-digit gains in major markets such as those in the US and Europe, while the FBM KLCI rose 12.9 per cent in 2024.
"On that note, there is always a possibility that EPF would deliver a respectable dividend rate for 2024," he said.
According to news reports, the EPF is expected to declare a dividend of more than 5.8 per cent for conventional savings last year, an increase from the 5.5 per cent declared in 2023.
Citing sources, it said the rate for shariah savings will range between 5.4 per cent to 5.6 per cent.
For the financial year 2023, the EPF announced a dividend of 5.50 per cent for conventional savings, with a total payout of RM50.33 billion, and 5.40 per cent for shariah savings, with a total payout of RM7.48 billion, bringing the total payout for 2023 to RM57.81 billion.
The EPF recorded a total investment income of RM66.99 billion in 2023, a 29 per cent increase from RM51.91 billion in 2022.
