This follows EPF chief executive Shahril Ridza Ridzuan’s statement last month that the fund will continue its five-year track record of beating inflation by at least 3.5 percentage points.
With the government then revealing that last year’s inflation rate was 3.7%, speculation is now rife that the EPF dividend could be at least 7.2%, The Straits Times reported.
This compares with the 5.7% dividend declared last year and 6.4% in 2016. The total payouts to contributors for both years amounted to RM37 billion and RM38 billion, respectively.
Based on the expected higher dividend this year, the total payout is also expected to reach a new record and breach the RM40 billion mark for the first time, according to the Singapore daily.
Such a move would not surprise most observers as this is an election year with the 14th general election, expected to be the toughest ever faced by the ruling Barisan Nasional coalition, just months, if not weeks away.
Should the EPF follow its five-year trend, it would be the first time since 1996 that the dividend has hit the 7% mark. That was just a year before the currency crisis took a big hit on the economy.
Since then, the best dividend the EPF had declared was 6.84% in 1999, which was when BN faced another tough election year, coming up against the reformasi-led opposition that saw cooperation between Parti Keadilan, PAS and DAP, in the wake of the incarceration of former deputy prime minister Anwar Ibrahim.
Aside from the GE14 factor, some analysts have also said the past year was good for the equities market.
Permodalan Nasional Berhad announced in December that it would pay a 7% dividend for 2017, up from the 6.75% paid the year before.
“Based on the EPF’s investment and portfolio assets performance, it is not surprising that the dividend rate may be higher than 6%,” Sunway University Business School economics professor Yeah Kim Leng was quoted as saying by The Sun.