KUALA LUMPUR: The Employees Provident (EPF) may fork out the highest ever dividend payout to its 16 million members for 2023, surpassing the current record-high of RM56.72 billion for 2021.
Economists said based on the pension fund's investment performance in the first nine months of 2023 and buoyed further by the expected stronger performance in the fourth quarter, the EPF could be paying out some RM60 billion in dividends for last year.
The improved performance of the equity market in the fourth quarter (Q4) will support the EPF's investment and thus increase its overall income, they said.
According to its recent quarterly financial release in mid-November, the EPF's net investment income stood at RM47.86 billion for the first nine months of 2023.
UniKL Business School economic analyst Associate Prof Dr Aimi Zulhazmi Abdul Rashid said the fund's investments in Q4 are expected to fare better than Q3 as the landscape was more stable due to the US Federal Reserve's (Fed) decision to keep interest rate steady during the last quarter fo 2023.
It also supported the domestic market performance which had seen higher average daily volume, thus setting the stage for the EPF to post better figures in Q4 versus Q3.
"Following the Fed's action to not raise rates in Q4, the domestic economy is also performing better underpinned by more focus strategy in the local market due to global slowdown demand.
"The EPF's performance for financial year 2023 (FY23) is expected to provide a better dividend payout, with the local money market being highly active and stabilised with Bank Negara Malaysia maintaining the overnight policy rate.
"Nonetheless, investors are closely monitoring the next move by the Fed, which has caused them to be more cautious and not fully commit to their portfolio," Aimi told Business Times.
The EPF's dividend payout stood at RM51.14 billion in 2022. Of the total, RM45.44 billion, or a dividend of 5.35 per cent, was paid to EPF members with conventional savings.
The remaining RM5.7 billion, or a dividend of 4.75 per cent, was paid to members with shariah savings.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the EPF's dividend is expected to be higher in 2023 as total investment income grew 33 per cent in the first three quarters of the year compared to the same period in 2022.
"This certainly suggests that the EPF dividend for 2023 will be better. Their portfolio diversification into overseas markets which constitute 37.7 per cent of total assets and contribute 45 per cent of the total income in the Q3 2023 indicates that the EPF has the ability to pay better dividends," he said.
He added that the global equities had been performing well last year with major indices such as S&P 500, Nasdaq, Nikkei 225, DAX and CAC having been rising at a double-digit pace.
"So we can expect higher income for the EPF in 2023," he said.
An EPF spokesperson was unable to comment on the matter pending dividend announcement, which is expected in March.
The New Straits Times previously reported that the EPF was expected to announce dividends of 5.5-6.5 per cent for 2023, higher than the 5.35 per cent for conventional savings and 4.75 per cent for shariah savings in 2022.
The EPF's dividend last hit above 6.0 per cent in 2018 at 6.15 per cent. The highest rate the fund had ever paid was 8.5 per cen in 1986.
The fund continues to record growth of new member registrations at 365,519, adding to the total number of 15.99 million as at Sept 30 last year. Of this, a total of 8.53 million are active members, representing 50.4 per cent of Malaysia's 16.93 million labour force.