LETTERS: Despite 2020 being a bad year in terms of the pandemic and economic downturn, the Employees Provident Fund (EPF) – a retirement savings fund responsible for ensuring members' retirement well-being – is able to dish out a dividend of 5.2 per cent for conventional savings and 4.9 per cent for syariah savings for 2020, with a total payout of RM47.64 billion.
And this could be the main reason why it had earlier announced its readiness to allow an unconditional withdrawal of EPF funds for those who are mostly affected by the economic downturn brought about by the pandemic.
The reason why the retirement fund is able to dole out a respectable dividend is because its investments overseas and on fixed income instruments in 2020 had produced good returns.
With some 14 million contributors, the Fund has achieved a net investment income of RM37.83 million for the first nine months of 2020, with its fixed income portfolio recording an income of more than RM22 billion for the same period.
EPF's fixed income instruments comprise largely government debt papers and highly rated corporate papers, which are actively traded with only a small portion held to maturity.
With a low interest rate regime expected throughout the pandemic, its fixed income portfolio is sitting on good profits as bond prices rise when interest rates fall.
In 2019, EPF disbursed a 5.45 per cent dividend to its conventional account holders and 5 per cent for the syariah account holders. Although a 5.2 per cent dividend for 2020 would be lower compared to the preceding year, nevertheless it is remarkable considering the volatile equities market.
This is indeed a piece of good news for the rakyat as it means they would likely receive fairly attractive returns despite the withdrawals from their EPF accounts.
On Feb 18, EPF said members below the age of 55 who have applied for the i-Sinar withdrawal facility will be given approval beginning March 8, which includes new applications received thereafter, subject to their available Account 1 balance.
For those who have RM100,000 and below in Account 1, they can withdraw up to RM10,000, and the payments will be staggered over a period of six months with the first payment of up to RM5,000.
Those with RM100,000 in Account 1 can withdraw up to 10 per cent of their Account 1, subject to a maximum amount of RM60,000. Many have welcomed the move as timely because of the hardships faced by the rakyat during MCO 2.0 along with the rise in unemployment in the last quarter of 2020.
This revision would help increase people' disposable incomes, which can be used to make ends meet. Also, this would do good to the economy in increasing private consumption expenditures, as consumption is an important driver of growth, and hopefully would prop up the GDP of the country.
As reported by a local daily, one EPF member welcomed the move because of his struggles to pay for his wife's dialysis treatments and to support his children. Some have been reported to need to use their EPF savings to repay their loans and to attend to other commitments.
It is indeed a sign the economics of empathy is still alive and kicking among government agencies at this unprecedented time of the third wave of the pandemic.
Jamari Mohtar and Sofea Azahar
EMIR Research, Kuala Lumpur
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times