Contributors to the Employees Provident Fund (EPF) have every reason to rejoice as EPF declares a 6.75% dividend rate for 2014, the highest rate since 1999. With the latest dividend rate, the total payout amounts to RM36.66 billion, an increase of RM5.46 billion compared to 2013’s RM31.2 billion. In 1999, the dividend rate was 6.84%.
Overseas equity investments were a major contributor to EPF’s outstanding 2014 financial results. EPF made RM39.08 billion in gross investment income for 2014, which is an 11.66% increase from RM35 billion in 2013.
EPF now aims to expand its global investments to 26% over the next three years from 23%, or RM149.56 billion, currently.
EPF’s CEO, Datuk Shahril Ridza Ridzuan said that their global investments have contributed 33% or RM13.01 billion towards their total income for 2014 despite being only 23% of their total assets.
The dividend declared for 2014 is equivalent to a rolling three-year real returns of 4.11% over inflation. EPF’s next aim would be to provide at least a 2% returns of above inflation over a three-year rolling period to preserve and add value to members’ savings in EPF.
On his outlook for 2015, Shahril said a lot depends on their domestic investments, as a lack of liquidity would impact its ability to generate returns from Bursa Malaysia. The biggest influencing factors were its equity portfolio, adding that its income growth would be affected if there are increased volatility in both global and domestic equity markets and reduced liquidity. However, he believes that fixed income, property and construction investments would yield stable return.
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