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» How is the EPF dividend rate calculated?

In order to determine the dividend rate, factors that need to be taken into consideration include net income and total for 1% dividend at year-end. 

For example:

Dividend Rate = Net income (a) x 1% Total for a 1% dividend (b)

  • Investment income + Non-investment income - Expenses
  • Total for a 1% dividend is based on:
    • Opening balance of contribution (after withdrawal) that obtain dividend for a 12-month period, and
    • Monthly contribution that obtain pro rated dividend i.e. dividend for the n-month will get (12-n) month dividend. For example, the September contribution (n=9) will obtain a 3 months dividend.


» Are all loans given by EPF guaranteed?

The majority of loans provided by EPF are guaranteed either by the Federal Government, the State Government, banks, or through assets, shares or properties. Although there are EPF loans without guarantees, the decision to invest in that particular loan is based on several criteria including safety, viability, risk as well as returns. To date, these types of loans experienced no problem in meeting its financial obligations.

»  What is nominal dividend rate?

Nominal dividend rate is the declared rate which is used in the calculation of dividend payment to members' accounts.

»  What is the dividend rate guaranteed by EPF?

Under Section 27 of the EPF Act 1991, the guaranteed minimum dividend rate is 2.5% per year on members' savings. As such, members are guaranteed to receive the minimum dividend rate in any situation.

»  Has the EPF fund been used to rescue selected companies?

The EPF's investment philosophy is "prudence" in carrying out the trust placed on them to safeguard EPF members' funds from investment loss risks.  EPF investments are carried out based on strict, comprehensive policies and guidelines and investment approvals are made by the EPF Investment Panel which possesses the expertise and high integrity.  In line with that philosophy, EPF funds have never been used to rescue any selected companies as EPF investments are only made based on tight guidelines approved by the EPF Investment Panels including property in order to obtain returns on the investments.

» How are investment decisions made?

Investment decisions are made through an in-depth process which ensures EPF members interests are protected by the EPF Investment Panel during the EPF Investment Panel meetings. 

» Where are members' savings invested?

Members' savings are invested in various investment instruments as follows:

  • Malaysian Government Securities
  • Loans, debentures and bonds
  • Shares Money market Property.

» Who implements the investment transactions?

Investment transactions are implemented by officers who have been granted the power to do so under the Delegation of Board Powers to the Chief Executive Officer and Board Officials. 

» What are Government Bonds or Malaysian Government Securities?

Government bonds or Malaysian Government Securities include: loans guaranteed fully by the Federal Government; Bank Negara Malaysia papers with a maturity period of at least three years from the date of issue; any commercial instruments (with elements of negotiability) issued by the State Government or local authorities with a maturity period of at least three years from the date of issue; and any deposits in advance subscription account under section 26(1)(a)(i). 

» What is meant by equities?

Equities are shares issued by companies listed on the stock exchange as well as shares which are not listed on the stock exchange. 

» What is real dividend rate?

Real dividend rate is nominal dividend rate less inflation rate. 

» Who decides/approves the dividend rate?

The rate of dividend is proposed by the EPF Management to the EPF Board. Following endorsement by the EPF Board, the Minister of Finance's approval is sought before the dividend rate is declared. 

» What are EPF's investment guidelines?

EPF investments are carried out based on guidelines that were approved by the EPF Investment Panel as well as the Minister of Finance in selected cases. 

» Who is responsible for the EPF investment policies?

The EPF Investment Panel is responsible to approve EPF's investment policies. 

» Who approves each investment proposal?

Each investment proposal will be tabled to the EPF Investment Panel for approval. 

» Who sits on the Investment Panel and who appoints them?

The EPF Investment Panel comprises:

  • The EPF Chairman
  • Representative from Bank Negara Malaysia
  • Representative from the Ministry of Finance
  • Three professionals from the private sector with wide experience in the areas of finance, trade or other relevant areas
  • Chief Executive Officer as Ex-Officio member. The members of the EPF Investment Panel are appointed by the Minister of Finance. 

» Does EPF pay tithe on its investment/savings?

EPF does not pay tithe on its investments/savings. 

» Are EPF's investments taxable?

EPF's investments in Malaysia are exempted from tax. 

» What are EPF's investments in national infrastructure?

EPF is also directly involved in financing national infrastructure projects to provide facilities and amenities to the public such as the Kuala Lumpur International Airport in Sepang, Independent Power Producers projects, highways and Light Rail Transit System (STAR and PUTRA). 

» What is the difference in EPF's current asset allocation compared with previous years?

Looking at the trend for the past 10 years, it is clear that EPF's asset allocation has undergone several changes particularly in investment in MGS. Investment in this instrument experienced a sharp decline due to lesser new issuance by Government. As such, the EPF funds had to be invested in other asset classes such as loans, money market instruments, equities and property. For example, investment in MGS in 1995 accounted for 40.94% of total investment during the year. In contrast, investment in MGS up to 31 March 2005 made up only 39.21% of the overall investment. Apart from that, EPF has increased its investment in the equity sector from only RM10.5 billion in 1995 to RM46.87 billion up to 31 March 2005. 

» How does EPF consider each investment proposal?

In considering any investment proposal, first, an in-depth study is carried out on the company which has the potential to be invested in. A due diligence exercise will be carried out to determine that the company is strong in terms of financial standing. Information regarding its shareholders and purpose of seeking the financing will also be required prior to presenting it to the Investment Panel. Subsequently, the Investment Panel will thoroughly assess the proposal before the investment approval is given. 

» How does EPF ensure the safety of its investments?

As the agency entrusted with its members' savings, EPF maintains a prudent investment policy whereby risks and returns are carefully considered to provide a correct balance to ensure the safety of its members' investment. In-depth studies will be undertaken prior to EPF implementing any type of investment. Investment analysts with the relevant professional qualifications will study in detail the companies, which have potential to be invested in. The EPF Management Investment Committee will thoroughly review each investment proposal prior to presenting it to the Investment Panel. The EPF Investment Panel will in turn undertake a detailed assessment of the proposals before approvals are granted. 

» What is meant by money market instrument?

Money market instruments are papers which can be traded in the money market. They include:

  • Negotiable Certificate of Deposits
  • Bankers Acceptances
  • Repo
  • Commercial Papers
  • Cagamas Notes.

» What are loans/debentures?

Loans are debt instrument which involve the loaner and the loanee, used to finance specific purposes whereby the rate of interest charges are agreed by both parties for a certain period. Loans are offered with or without collateral.

Debentures are debt security instruments issued by any company as proof of the debt or as security for the total fixed loan. Debentures include stock debentures, bonds and other securities of the lending company regardless of whether it has or has not any charge on the company's asset. Debentures usually provide charge on the company's asset or in the form of security. 

» How is the investment returns distributed to members?

Returns on investments are distributed to members via the annual dividend payments. 

» When is the dividend declared each year?

The dividend, approved by the Finance Minister, will be declared by the EPF Board on or after the end of the financial year i.e. 31 December of each year. 

» Why does the total asset and total investment differ?

Total asset and office equipment comprises EPF's fixed asset including office building, while total investment represents EPF funds which are invested in all investment instruments including property in order to obtain returns on the investments. 

» To what extent does the Government control EPF's investments?

The Government does not control EPF's investment. Instead, it is implemented only after detailed studies are carried out to determine the level of return and investment risks. Any investment proposal will be presented to the EPF Investment Panel for approval.

» Are members allowed to withdraw any income distribution derives from their investments with the Fund Management Institutions (FMI) under the EPF MIS?

Any income distribution derives from members investment with FMI under the EPF MIS will be reinvested  and there shall be no leakages. 

» What is the method used by the EPF to shortlist unit trust funds offered under the EPF MIS? 

Unit trust funds offered under the MIS must comply with the annual Funds Selection Criteria determined by the EPF.  Equity, Balanced, Bon and Money Market funds with 3 years track records will be evaluate. 

» What is the period required for members to redeem their investment with FMI?

There is no mandatory period determine by the EPF for members to redeem their investment with FMI.


For more information, please call EPF Contact Management Centre at 03-89226000 or access to EPF enquiry


Updated: 18 November 2015

Reviewed: 19 February 2019