EPF Declares 6.15 Per Cent Dividend For 2012
The Employees Provident Fund (EPF) Board, with the approval of the Minister of Finance, today declares a dividend rate of 6.15 per cent for the financial year ended 31 December 2012.
The dividend rate, an increase of 15 basis points over the 6.00 per cent rate paid out in 2011, translates to a record breaking total of RM27.45 billion being distributed to its members, an increase of 12.20 per cent over RM24.47 billion paid out in the previous year.
In a statement issued today, EPF Chairman Tan Sri Samsudin Osman said, "Notwithstanding the increasingly complex investment environment, the EPF maintained its steady upwards momentum to post its strongest set of results since the turn of the millennium, underpinning the effectiveness of its long term investment strategy as well as its disciplined and prudent approach."
In 2012, the EPF posted its highest gross investment income to date of RM31.02 billion, up 13.91 per cent from 2011. The highest ever dividend payout of RM27.45 billion was derived after deducting investment expenses, operating expenditures, statutory charges and net impairment allowance on financial assets.
"The EPF's main objective is the protection of members' capital by generating a return that beats the rate of inflation. We continue to fulfil this commitment year on year through our Strategic Asset Allocation (SAA) which seeks consistent returns in the long term within tolerable risk limits for each asset class," said Tan Sri Samsudin. (Refer to Chart 1)
Consistent with its SAA, the bulk of the Fund's investment assets continue to be in stable and traditional low risk fixed income instruments. Equities made up 38.77 per cent of total investment assets for the year, while the remaining 3.59 per cent and 2.42 per cent were allocated for Money Market Instruments and Real Estate and Infrastructure asset classes, respectively. (Refer to Table 1)
"Despite being a diversified fund predominantly invested in low risk fixed income instruments, EPF's annual return on investment (ROI) has topped 6 per cent for the third year running. Equities generated a double digit ROI of 10.06 per cent while returns from fixed income instruments exceeded 5.50 per cent in spite of the current low interest rate conditions," explained Tan Sri Samsudin.
Due to a number of one-off capital market transactions undertaken during 2012, Loans and Bonds showed the highest increase in year-on-year income. Investment in this asset class contributed RM9.68 billion to gross investment income, up 33.62 per cent or RM2.44 billion compared to 2011.
"In view of the prevailing low interest rate environment, the EPF has gradually decreased its exposure in traditional and conventional fixed income assets and has shifted maturing assets into higher yielding assets in the form of equities and real estate but within the tolerable risk limits," said Tan Sri Samsudin.
On the back of a steady growth seen in both domestic and global equity markets in 2012, Equities contributed RM13.91 billion in income representing 44.84 per cent of gross investment income.
Meanwhile, investments in Malaysian Government Securities and Equivalents, Real Estate and Infrastructure and Money Market Instruments earned RM6.26 billion, RM595.63 million and RM574.91 million respectively. (Refer to Table 2)
EPF total investment assets as at 31 December 2012 stood at RM526.75 billion surpassing the half a trillion mark, up 12.31 per cent from RM469.04 billion recorded in the previous year. This increase was largely contributed by the positive net annual contributions from members and employers as well as consistent and encouraging investment performance across all asset classes.
As a result of the increase in membership base, the EPF requires RM4.46 billion to pay every one per cent dividend rate for 2012. This represents a 9.34 per cent increase over RM4.08 billion paid for every one per cent dividend rate for 2011 (Refer to Chart 2). The amount needed to pay a one per cent dividend rate will continue to rise 8 to 9 per cent annually.
One of the notable transactions in 2012 was the Fund's expansion of its property investments, both overseas and locally, which includes the Battersea Power Station project in London, United Kingdom, and the finalising of the purchase of 932 hectares of Rubber Research Institute land in Sungai Buloh for RM2.28 billion to be developed into a new township.
In line with its diversification strategy to optimise members' long term returns, EPF total overseas exposure as at 31 December 2012, constituted 15.70 per cent of its total investment assets. During the year, an additional USD7.10 billion of investments were made in global equities, global bonds and real estate.
"With more than half a trillion of funds under management, the EPF faces a profound challenge to deliver continuously strong returns amid the low interest rate environment, the continued fragility of the global economy as well as constraints within the domestic capital market.
"Nevertheless as a retirement fund, we will continue to be guided by our long term investment objectives and prudent investment strategy to ensure sustainability and consistent returns in the interest of our members' retirement well-being," stated Tan Sri Samsudin.
Members may check their EPF Account Statement for the crediting of the 2012 dividend, either through EPF Kiosks, counters or i-Akaun, from Monday, 18 February 2013.
Members age 55 and above may withdraw the annual dividend credited into their account as one of several payment options available under the Age 55 Withdrawal. For more information on this withdrawal, please contact EPF Call Centre at 03 – 8922 6000 from 8.00 am to 7.00 pm from Monday to Friday or log on to myEPF at www.kwsp.gov.my
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: 17 February 2013