Frequently Asked Question

Find out the answers on EPF Dividend 2020.

• What is the 2020 Dividend rate for Simpanan Konvensional (SK) and Simpanan Shariah (SS)?

  The 2020 Dividend rate for Simpanan Konvensional (SK) is 5.2% and 4.9% for Simpanan Shariah (SS).

• What is the total dividend payout for 2020?

  The total dividend payout for 2020 is RM47.64 billion, where RM42.88 billion is for SK and RM4.76 billion for SS.
  Of the RM8.25, the payout amount required for every 1% dividend rate for the year is RM972 billion.

• How is the annual dividend calculated?

  The dividend is calculated based on the “Modified Aggregate Daily Balance”. Contributions for a particular month will be eligible for dividend based on the last day of the contribution month until 31 December 2020.
  Assuming a dividend rate of 5%, the Aggregate Balance calculation is as follows:

  Contribution Month	Account 1 (70%)	Account 2 (30%)
  Opening balance (1.1.2020) = RM10,000	RM7,000	RM3,000
  Jan 2020	RM700	RM300
  Feb 2020	RM700	RM300

   

  Aggregate balance (Jan)	= (Opening balance X 31) + (Jan X 1)
  Account 1	= (7,000 X 31) + (700 X 1)
  	= 217,700

   

  Dividend (Account 1)	= (217,700/366) X 5%
  	= RM 29.74

   

  Aggregate balance (Feb)	= [(Opening balance +Jan) X 29] + (Feb X 1)
  Account 1	= (7,700 X 29) + (700 X 1)
  	= 224,000

   

  Dividend (Account 1)	= (224,000/366) X 5%
  	= RM 30.60

  Note: The same method is used to calculate the total dividend for Account 2.

   

• How does the EPF derive its annual dividends?

  The EPF derives its annual dividends from income realised from its investment assets. This income is net of market losses, investment costs and other related expenditures.

• What is the EPF’s Strategic Asset Allocation (SAA)?

   

  • The EPF is guided by its Strategic Asset Allocation (SAA) in its investment activities to increase return within its risk tolerance limit.
  
  
  • The SAA is broken down into the following asset classes:
    • Fixed Income Instruments: 53%
    • Equities: 36.5%
    • Real estate & infrastructure: 7.5%
    • Money markets instruments: 3%
  • Fixed income instruments provide stable income while preserving capital
  • Equities provide potential capital gains and dividend income
  • Real estate and infrastructure provide a hedge against inflation
  • Money markets instruments are for day-to-day operations

   

• Is it possible for EPF to take on excessive risks in its investments?

  The EPF acknowledges that members are concerned about the decisions that the EPF undertakes in managing its investments.
  To ensure that risks are mitigated, the EPF follows a stringent due diligence process that requires any proposal to first go through the Management Investment Committee, where it will be scrutinised in accordance with our long-term diversification strategy and risk-return profile.
  Final approval is obtained from the Investment Panel.

• Why is there a difference between the dividends declared for SK and SS?

   

  • The dividends declared are reflective of the actual performance of the EPF’s investments.
  • The income generated from the Shariah portfolio is shared between SS and SK while SK also benefits from income generated by the Conventional portfolio.

   

• Why should members switch to SS which does not guarantee minimum dividend rate like SK?

   

  • SS is an option for members who want their retirement savings being managed and invested in accordance to Shariah principles, of which the return on investment is based on its actual performance.
  
  
  • The decision to switch to SS lies solely with members.

   

• What type of investment constitutes as Non-Shariah compliant?

   

  • This refers to investment that violates Shariah principles such as interest-based investments (usury) e.g. conventional banking stocks, conventional loans and bonds.
  • In addition, equity investments that do not comply with the Shariah screening criteria adopted by the EPF's Shariah Advisory Committee are deemed as Non-Shariah compliant investments such as companies that earn income from Non-Shariah compliant activities and have debt and cash in conventional instruments that exceed the permitted threshold. In addition, non-Shariah compliant real estate investment is determined based on rental income derived from tenants operating Non-Shariah non-compliant activities.

   

• I am a Muslim and have not opted to switch to SS. What is the percentage of SK dividend for 2020 that needs to be purified?

  The SK dividend derived from non-Shariah compliant investments cannot be used for personal gain and benefit of Muslim members and should be purified as resolved in the 87th Muzakarah (Conference) of the Fatwa Committee National Council of Islamic Religious Affairs Malaysia held on June 23-25, 2009 as follows:

  In Islam, property acquired by means that are not Shariah-compliant, such as usury, ambiguous transactions, gambling, fraud, robbery, plunder, corruption, etc is illegal and cannot be used for personal gain and benefit and must be purified through the following methods:

  1. Channelled to Baitulmal for the general public interest of Muslims such as for funding the construction or maintenance of bridges, roads, toilets, etc; or
  2. Given to the poor.

  SK dividend’s purification rate for 2020 is 69% of the amount of dividends credited to the member’s account.

• For Muslim members who have not opted to switch to SS, can they purify SK dividend based on the difference between SK and SS dividends?

  No. Purification of SK dividends cannot be done by simply purifying a certain amount of dividends based on the difference between SK and SS dividends. Purification of SK dividends should be done based on the income contribution of conventional investments to SK dividends.

  SK dividend’s purification rate for 2020 is 69% of the amount of dividends credited to the member’s account.

• Are members allowed to switch back to SK?

   

  1. Once a member has switched to SS, they are not allowed to switch back to SK. This is to prevent speculative investments for short-term returns.
  2. SS was introduced for EPF members who choose to have their retirement savings invested in accordance with the Shariah principles that provide dividends from sources that are Shariah-compliant.
  3. Those who prefer not to restrict their EPF savings from earning dividends from Shariah-compliant and conventional investment assets may want to remain with SK.

   

• Where can members access the 2020 Member Statement?

  The 2020 Member Statement can be accessed via the i-Akaun (Member) website and mobile application, EPF counters, and kiosks at EPF office and third-party premises.

  In line with COVID-19 SOPs, members are encouraged to download their 2020 Member Statement online via i-Akaun (Member).

• How can members living overseas obtain their Member Statement?

  Members living overseas can obtain their Member Statement via the i-Akaun (Member) website and mobile application. Members may also contact the EPF Contact Management Centre at +603-89226000 for any enquiries regarding the Member Statement.