Earlier, EPF declared a 5.35% dividend for conventional savings and 4.75% for shariah savings. This compares with the 6.10% for conventional savings and 5.65% for shariah savings declared for 2021.
EPF also announced a total payout of RM51.14 billion to members, comprising RM45.44 billion for conventional savings and RM5.7 billion for shariah savings.
Economist Yeah Kim Leng said a lower dividend was expected given the turbulence in the local and global financial markets last year arising from the “risk-off” environment (when stocks are selling off) and the tightening of monetary policies in response to the sharp inflation spike across the world triggered by the Russia-Ukraine conflict.
“It is commendable that EPF managed to declare a dividend rate of 5.35%, which is more than double the average three-month fixed deposit rate of 2.6% in 2022,” he told FMT.
He said that with inflation coming in at 3.3% last year, the lower dividend in comparison to 2021 would still provide a reasonable real annual return of close to 2%.
“With the EPF fund performance managing a real positive return in 2022, contributors are assured of the continuing rise in their retirement savings pool,” he said.
Shankaran Nambiar of the Malaysian Institute of Economic Research (MIER) shared similar sentiments, saying EPF had done a fairly good job, especially since there were withdrawals that could have disrupted its investment plans.
However, he warned that the dividends would take a further dip in 2023.
“Returns from EPF will not be the safe haven they were in previous years. It’s a new reality,” he said.
Malaysian Trades Union Congress (MTUC) president Effendy Abdul Ghani said the EPF dividend rate for 2022 was “quite good” considering the economy was going through a recovery period after the Covid-19 pandemic.
“Many long-term investments will go through a dip in their dividends following the rough past couple of years. It is to be expected.
“Being able to stay above the 5% rate is already quite good for EPF,” he said.
Effendy said the lower dividend rate would not have any major impact in the long term.
EPF’s dividend payout for conventional savings has ranged from a low of 5.2% (2020) to a high of 6.9% (2017) over the past decade.