EPF Dividend Expectations: A Slight Increase Expected for Conventional Savings

Petaling Jaya: The Employees’ Provident Fund (EPF) is expected to announce a dividend of more than 5.8% for conventional savings, a slight increase from the 5.5% declared in 2023, according to a source in the know.

Dividend Rate for Shariah Savings

The rate for shariah savings is expected to be between 5.4% to 5.6%, a slight increase from the 5.4% declared two years ago. The source considers this a "safe bet", with the final figure expected to be announced by the retirement fund in early March.

Average Dividend Rate for the Last 10 Years

The average dividend rate for the last 10 years has been 6%, with the possibility of it being the highest in the last three years. The total payout for conventional accounts in 2023 was RM50.33 billion, while for shariah savings, it was RM7.48 billion.

EPF’s Cautious Approach

The EPF is among the few pension funds in the world that gives out dividends based on realised returns, which are actually cashed in after the investments are sold. This approach is different from total returns, which include paper gains that are later determined by market performance. Singapore’s Central Provident Fund uses the realised gains approach, with an average dividend rate of 4% for the last 10 years.

Strong Performance in the Third Quarter of 2024

Recent news reports have quoted several economists saying that the likelihood of last year’s dividends being over 6% is high based on strong performance in the third quarter of 2024. For the first nine months last year, the EPF posted an investment income of RM57.57 billion, a 20% increase from RM47.86 billion during the same period in 2023.

Conclusion

In conclusion, the EPF is expected to announce a dividend of more than 5.8% for conventional savings, with the rate for shariah savings expected to be between 5.4% to 5.6%. The EPF’s cautious approach to investing and the strong performance in the third quarter of 2024 have contributed to the high expectations for the dividend.

Frequently Asked Questions

• What is the expected dividend rate for conventional savings?
  The expected dividend rate for conventional savings is more than 5.8%.
• What is the expected dividend rate for shariah savings?
  The expected dividend rate for shariah savings is between 5.4% to 5.6%.
• What is the average dividend rate for the last 10 years?
  The average dividend rate for the last 10 years has been 6%.
• How does the EPF calculate its dividends?
  The EPF calculates its dividends based on realised returns, which are actually cashed in after the investments are sold.