23 February 2020

Insights into EPF 2019 Performance

The Employees Provident Fund (EPF) delivered a solid performance for 2019 in terms of both its operational and financial results, allowing it to declare a dividend of 5.45% with a payout amounting to RM41.68 billion for Simpanan Konvensional.

Meanwhile, EPF declared a dividend rate of 5.00% for Simpanan Shariah 2019, with a payout amounting to RM4.14 billion.

What did EPF say?
Why differing Dvididend Rate for Conventional & Syariah?
Outlook for the year 2020?

Chief EPF Officer Alizakri Alias said,

“As anticipated, we saw substantially more volatility in 2019 as compared to 2018. Certainly, 2019 exemplified what it means to be living in a VUCA* world. Many issues in the global markets remained unresolved, but we also saw some new issues cropping up." 

"There were three rate cuts made by the US Federal Reserve, the US-China trade spat escalated and continues to be unresolved, and there were uncertainties surrounding the Brexit negotiations. On top of this, we did not expect the Hong Kong protests to be prolonged and that certainly added pressure on an already fragile far-east market.”

“In addition, the domestic markets did not support the income-generating capabilities of the EPF as 70% of the fund’s assets are in Malaysia, with a major part of our assets in domestic equities."

Image result for VUCA

Key Highlights:

~ Overall investment assets grew to RM924.75 billion
~ 2.8% growth in membership to 14.6 million (7.6 million were active members)
~ Registered employer base expanded by 3% to 522,300 employers
~ 24.6% rise in i-Akaun subscribers to 7.6 million
~ Over 10,000 members making transactions worth RM81.8 million in value via EPF i-invest

~ Nearly 83,000 members use Retirement Advisory Service since 2014
~ 137,000 registered for i-Saraan (for informal workers)
~ 88,500 registered for i-Surin (for housewives)

Source: https://www.thestar.com.my/news/nation/2020/02/23/why-epf-returns-are-lower

Why there are Differing Dividend Rates between Simpanan Shariah and Simpanan Konvensional? 

Alizakri said, “The dividends from Simpanan Shariah differs because the universe of assets that we can invest in and which is Shariah-compliant is not as wide as that available for the conventional option. A majority of the investments were in the domestic markets, which did not perform as well in 2019.”

How about the performance for 2020 would be like?

Alizakri said, “We expect that 2020 is going to be just as or even more challenging than 2019, with the full impact of the COVID-19 virus likely to drag down already soft global growth. The US-China trade war still sees no signs of ending, among other risks to economic recovery. We hope that the domestic markets will be resilient, especially in light of the soon-to-be-announced government stimulus package which should help support investor and consumer sentiment.”

Source: KWSP, EPF

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