The Employees Provident Fund (EPF) Board, with the approval of the Minister of Finance, has declared a dividend rate of 6.00 per cent, the highest in the last 10 years, for the financial year ended 31 December 2011. The dividend rate, an increase of 20 basis points over the 5.80 per cent rate paid out in 2010, translates to a total of RM24.47 billion being distributed to its members.
In a statement issued today, EPF Chairman Tan Sri Samsudin Osman said, “The year 2011 marks another commendable achievement for the EPF. Despite the challenging investment landscape, it was the strongest performance since the year 2001 that affirms our long term and prudent investment strategy combined with continuous efforts by our investment team.”
The EPF continues to achieve new heights in 2011 by posting gross investment income of RM27.24 billion, up 13.18 per cent from 2010. The dividend payout of RM24.47 billion was derived after deducting net impairment allowance on financial assets, investment expenses, operating expenditures, statutory charges and dividend on withdrawals, representing an increase of 13.23 per cent compared to RM21.61 billion recorded in 2010.
“While our fixed income investments provide stable returns, the Fund’s overall performance was largely attributed to the gains realised in both domestic and global public listed equities as well as our active management programmes.
“This strong performance post-2008 financial crisis is a testament to our commitment and disciplined approach to investment. While we cannot assure that we can maintain this performance amid the global economic and market uncertainties, we are committed to safeguarding and adding value to our members’ retirement savings, particularly against inflation”, stated Tan Sri Samsudin.
As at 31 December 2011, EPF total investment assets continued to register healthy growth of 6.52 per cent to RM469.22 billion from RM440.52 billion recorded in the previous year. This rise was primarily contributed by the positive net annual contributions from members and employers, consistent and encouraging investment performance.
In line with its focus on delivering steady returns for the long-term, the EPF continued to invest the bulk of its investment assets, or 60.79 per cent, in stable and conventional low risk fixed income instruments. In accordance with tolerable risk exposure, Equities represented 35.64 per cent of total assets while the remaining 3.18 per cent and 0.39 per cent were allocated for Money Market Instruments and Properties asset classes, respectively. (Refer to Appendix 1, Table 1)
Equities were the largest income contributor at RM13.29 billion representing 48.81 per cent of total investment income. This was followed by Loans and Bonds, Malaysian Government Securities and Money Market Instruments which contributed RM7.54 billion, RM5.63 billion RM656.36 million respectively. The balance RM115.41 million or 0.43 per cent was contributed by Property and Miscellaneous Investment Income. (Refer to Appendix 1, Table 2)
“Since our holdings are predominantly in fixed income assets, the returns are largely influenced by the interest rate direction. In light of the prevailing low interest rate environment, it is indeed a challenge for us to maximize our returns. Therefore, we have gradually and cautiously moved into higher yielding assets within tolerable risk limits. The strategies seem to bode well, in advance of our expectation, as we managed to outperform the current fixed deposit and interest rates,” Tan Sri Samsudin said.
“One of the highlights of our investment activities in 2011 was the completion of the joint-acquisition (with UEM Group) of PLUS Expressway Berhad through co-investment vehicle PLUS Malaysia Sdn Bhd. In addition, we have also expanded our global investment exposures in Properties as well as Equities and Sukuks. These expansions are in line with our investment objective and strategy guided by our Strategic Asset Allocation and Risk Management Framework”, he added.
Due to the increased membership base, RM4.08 billion is required to pay each one per cent dividend rate for 2011. This represents a 9.44 per cent increase over RM3.73 billion paid for every one per cent dividend rate for 2010. (Refer to Appendix 2, Chart 1). The amount required to pay a one per cent dividend will continue to rise 8 to 9 per cent annually.
“We anticipate that the fund size will hit half a trillion by the end of this year or early next year. As a retirement fund, we will hold firmly to our long term investment objectives and prudent investment strategy in the best interests of our members for their retirement years”, he added.
Members may check their EPF Account Statement for the crediting of the 2011 dividend, either through EPF Kiosks, counters or i-Akaun, from Monday, 20 February 2012.
About the Employees Provident Fund (EPF)The Employees Provident Fund (EPF) is Malaysia’s premier retirement savings fund, providing basic financial security for retirement. The Fund is committed to preserving and growing the savings of its members in accordance with best practices in investment and corporate governance. It will always be guided by prudence in its investment decisions.
As a customer-focused organisation, the EPF delivers efficient and reliable services for the convenience of its members and registered employers.
The EPF continues to play a catalytic role in the nation’s economic growth, consistent with its position as a leading savings institution in Malaysia.
Date: 19 February 2012