EPF Declares 6.35% Dividend For 2013

The Employees Provident Fund (EPF) Board, with the approval of the Minister of Finance, today declared a dividend rate of 6.35 per cent for the financial year ending 31 December 2013, representing the biggest ever dividend payout of RM31.20 billion to its members, up 13.66 per cent over the RM27.45 billion paid in 2012.

In a statement today, EPF Chairman Tan Sri Samsudin Osman said: “Thanks to our robust yet prudent investment strategies, our performance has been consistently stable, especially in the past five years. Over the years, we have been diversifying our portfolio, thereby spreading out the scope of our assets to manage market risks and generate consistent returns. 

It is worth mentioning that since the 2008 global financial crisis, the EPF has declared compounded dividends of more than RM120 billion for its members. Including the net annual contributions, our investment asset size had recorded a strong rise; from RM342.01 billion in 2008 to RM586.66 billion at the end of 2013.” (Refer to Table 1)

The dividend rate was declared on the back of a record gross investment income of RM35.00 billion, a 12.81 per cent rise from the RM31.02 billion gross investment income recorded in 2012 (Refer to Table 2). The 2013 dividend payout was derived after deducting the net impairment allowance on financial assets, investment expenses, operating expenditures, statutory charges as well as dividend on withdrawals.

As the EPF membership rose to more than 13 million, a total of RM4.91 billion was required to pay every one per cent dividend rate for 2013 (Refer to Chart 2). This was 10.06 per cent higher compared with RM4.46 billion paid for every one per cent dividend rate for 2012. The amount needed to pay a one per cent dividend would continue to grow between eight and nine per cent annually. 

“The investment performance has led the EPF to achieve an annual return on investment (ROI) of 6.97 per cent, a rise of 10 basis points from 2012. This is a manifestation of our sound investment principles and diversified portfolio across different markets and sectors,” said Tan Sri Samsudin.

Equities emerged as the largest contributor to the EPF’s gross investment income in 2013, generating RM19.52 billion of income, a significant increase of 40.39 per cent compared with RM13.90 billion recorded in 2012. EPF’s equities portfolio generated double digit realised returns, exceeding the performance of other similar funds.

“The strong performance in our equity portfolio was helped by the local and global indices reaching new highs. This was attributable to investors’ confidence in the stability and fundamental economic strength of our domestic market with the conclusion of the 13th General Election. The market-driven liquidities that followed had also facilitated us to lock in large capital gains.  The global equity environment has shown much improvement, with many global indices exceeding the pre-2008 crisis level,” Tan Sri Samsudin said.

Loans and Bonds recorded RM7.53 billion of income, a lower amount compared with the previous year, in the absence of significant one-off transactions which had contributed a large portion of returns to the asset class in 2012. The lower returns were also reflective of the prolonged low interest rates globally, as maturing investments were reinvested at lower rates.

Real Estate and Infrastructure continued to show encouraging performance in 2013, earning RM1.14 billion, a jump of 87.91 per cent over RM606.05 million in 2012. The year under review also witnessed the investments in Malaysian Government Securities and Equivalents continue to be a key income contributor, achieving an income of RM6.19 billion, while Money Market Instruments recorded RM627.86 million.

“Our achievements reflected the effectiveness of a balanced and diversified fund. 2013 was a very good year for our equity investments while the year before that showed us faring better in the fixed income portfolios. By having a diversified portfolio across many markets, we are able to take opportunities when they arise and reduce the overall risk to the fund.

However, we remain cautious for the coming year as volatility in interest rates may possibly affect our returns, given that EPF funds are predominantly invested in low risk fixed income instruments. Additionally, we anticipate substantial volatility in emerging markets as liquidity tightens globally,” added Tan Sri Samsudin.

The Fund’s total overseas exposure constituted 20.97 per cent of its total investment assets based on book value as at end December 2013, registering a rise from 16.98 per cent the year before. During the year under review, the EPF had outsourced USD2.20 billion to the external fund managers for global equity mandates, while a total of RM2.25 billion and RM850 million were injected  into domestic fixed income and equity mandates respectively.

“Managing a large fund is a great challenge, which necessitates the EPF to employ a dynamic diversification programme. To secure a stable long-term yield and manage risks, we continue to expand our reach overseas and broaden our outsourced asset management. The success of this strategy was reflected in the second half of 2013 as gains in developed markets offset the weaknesses in emerging markets.

Given the global economic slowdown and financial uncertainties, we remain steadfast and our achievements are testament to the EPF management’s continuous efforts and initiatives to maintain long-term financial stability,” stated Tan Sri Samsudin.

The 2013 dividend can be viewed on the EPF’s Facebook page at Kumpulan Wang Simpanan Pekerja, Twitter at KWSPBuzz and on YouTube.

EPF account statement for the crediting of the 2013 dividend is now available online via i-Akaun at myEPF website (www.kwsp.gov.my). Alternatively, members can obtain their EPF account statement from EPF Kiosks or any nearest EPF branch, starting Monday, 17 February 2014. 

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.