EPF DELIVERS SOLID PERFORMANCE IN LIGHT OF CHALLENGING 2019
Strategic Asset Allocation proves value in challenging environment
Fixed Income provided stability amidst volatility
Assets under management grew to RM924.75 billion
Launch of i-Invest platform sees encouraging take-up by 10,000 members
KUALA LUMPUR, 22 February 2020:The Employees Provident Fund (EPF) delivered a solid performance for 2019 in terms of both its operational and financial results, allowing it to declare a dividend of 5.45% with a payout amounting to RM41.68 billion for Simpanan Konvensional.
With this, the EPF delivered 2.95% above what is mandated under the EPF Act 1991, which requires it to declare at least a 2.5% nominal dividend every year. On top of that, the EPF’s three-year average dividend for Simpanan Konvensional after adjusting for inflation, stood at 4.33%, which is 2.33% above the fund’s three-year rolling target of 2.00%.
The EPF’s overall investment assets grew to RM924.75 billion as it experienced a 2.8% growth in membership to 14.6 million while its registered employer base expanded by 3% to 522,300 employers. There was also a 24.6% rise in i-Akaun subscribers to 7.6 million.
2019 also saw the EPF making significant strides in its efforts to improve its offerings to members. It launched i-Invest in August 2019 to help members make informed decisions on unit trust investments, which saw over 10,000 members making transactions worth RM81.8 million in value. The number of members using its Retirement Advisory Service has also continued to grow since its inception in 2014, with nearly 83,000 members served. In addition, the number of those registered for i-Saraan stood at 137,000 while those registered for i-Suri stood at 88,500, marking strong growth for both products.
Chief EPF Officer Alizakri Alias said, “As anticipated, we saw substantially more volatility in 2019 as compared to 2018. Certainly 2019 exemplified what it means to be living in a VUCA world. Many issues in the global markets remained unresolved, but we also saw some new issues cropping up. There were three rate cuts made by the US Federal Reserve, the US-China trade spat escalated and continues to be unresolved, and there were uncertainties surrounding the Brexit negotiations. On top of this, we did not expect the Hong Kong protests to be prolonged and that certainly added pressure on an already fragile far-east market.”
“In addition, the domestic markets did not support the income-generating capabilities of the EPF as 70% of the fund’s assets are in Malaysia, with a major part of our assets in domestic equities.
“Nonetheless, our Strategic Asset Allocation and decision-making structure provides a robust system that guides and shields us from the storms. Thanks to this we fulfilled the mandate from our members of preserving and growing their capital, and we are pleased to deliver results which have turned out better than we had initially projected.”
“Much of this achievement can be attributed to the long-term diversification strategies we have consistently pursued, which have ensured that we did well in spite of the difficult conditions,” he added. “The EPF has always held that overseas holdings are an essential and important part of our overall portfolio, and have already announced on several occasions our intentions to continue these diversification efforts to reduce concentration risks”.
Alizakri also said, “We expect that 2020 is going to be just as or even more challenging than 2019, with the full impact of the COVID-19 virus likely to drag down already soft global growth. The US-China trade war still sees no signs of ending, among other risks to economic recovery. We hope that the domestic markets will be resilient, especially in light of the soon-to-be-announced government stimulus package which should help support investor and consumer sentiment.”
Alizakri also assured members that the Fund recognises the increasing pressures of the new decade. “For 2020 and the years ahead we will continue to focus on delivering not only financial dividends, but also on our obligation to provide social dividends for our members. We want our members to be empowered with the knowledge and tools to enable them to live more fulfilling lives while pursuing a better future.”
The Employees Provident Fund (“EPF”) is one of the oldest retirement funds in the world. Established in 1951, the EPF is a Member-Linked Company (MLC) focused on a mission to safeguard member savings and deliver excellent services. In recent years, in line with its vision of helping members achieve a better future, the EPF has expanded its role to encompass the creation of a comprehensive social well-being ecosystem. Today, the EPF remains steadfast in its commitment to members through consistent efforts to update and improve itself, in order to build the foundation for sustainable, holistic and equitable well-being for all Malaysians.