EPF’s 6.15 Pct Dividend Respectable, Reflects Resilient Market Performance - Economists

By Rosemarie Khoo Mohd Sani

KUALA LUMPUR, March 1 (Bernama) -- The Employees Provident Fund’s (EPF) dividend rate of 6.15 per cent for both the conventional and shariah savings accounts, with a total payout of RM79.6 billion for 2025, is respectable and reflective of resilient financial market performance despite global volatility, said economists.

Khazanah Research Institute (KRI) chairman Dr Nungsari Ahmad Radhi said the retirement fund has delivered strong returns despite 2025 being a tough year with numerous uncertainties in equity and debt markets, both domestically and internationally.

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“The Malaysian equity market rose gradually throughout the year and breached 1,700 only early this year.

“So, a good allocation by EPF and an indication that Bursa Malaysia has some resilient dividend companies. A positive thing but also indicative that Bursa needs more growth companies,” he told Bernama.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the dividend is strong despite being slightly lower than last year’s 6.3 per cent and continues to provide real returns above inflation.

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“The dividend rate is still well above the long-term inflation rate of 2.50 per cent, which effectively gives the real dividend rate of 3.65 per cent.

“What it means is that the EPF members are still better off after taking into consideration the inflation rate,” he said, adding that the dividend is still high by historical standards.

Mohd Afzanizam noted that the last time the dividend rate for conventional savings was 6.15 per cent was in 2018.

As for shariah savings, it is higher than the 5.9 per cent in 2018.

“Considering the market volatility, the EPF has delivered respectable performance,” he said.

Mohd Afzanizam said the gap between earlier dividend forecasts and the actual rate announced by the EPF reflected the ringgit’s 10.1 per cent appreciation against the US dollar in 2025, which affected global portfolio investment returns from an accounting perspective.

He said domestic investment, which made up 61.7 per cent of total investment assets, was also weighed down by the relatively modest 2.3 per cent gain in the FBM KLCI as opposed to other major global markets.

On that note, he said a strategic decision to increase the share of global investment has to be made in order to improve the dividend rate going forward.

On EPF’s investment income profile, despite 38.3 per cent of total assets being channelled into overseas investment, it contributed 50.4 per cent of total investment income.

“We could see that such a trend has been quite consistent in the past years where overseas investment income has been greater despite commanding a lower share in terms of asset allocation geographically,” Mohd Afzanizam said.

Similarly, Nungsari said that global investments generated higher returns relative to domestic allocations.

According to EPF’s statement today, the fund allocated 61.7 per cent of its investments to domestic markets, while 38.31 per cent was allocated to global markets.

Domestic investments accounted for 49.6 per cent of total investment income, while global investments accounted for 50.4 per cent.

Nungsari said that this highlighted that global markets have higher returns.

He said that this also illustrated the need to strengthen the attractiveness of the domestic market while recognising the risks of global exposure.

“This says two things — domestic equities must be more attractive, and EPF’s income is sensitive to global equity markets,” he said.

On the other hand, Nungsari said the dividend could also encourage higher voluntary contributions and strengthen retirement adequacy.

“People must understand that to get six per cent is very good and trust EPF and not some scammers promising double-digit returns,” he said.

Regarding the outlook, Nungsari said global monetary easing and external risks would influence EPF’s future performance, affecting the fixed income portion of its portfolio.

The KRI chairman added that he was more concerned with trade and political uncertainties than with accommodative monetary policies.

-- BERNAMA