EPF 2021 dividend is expected to maintain at 5 percent

KUALA LUMPUR Feb 14 - The Employees Provident Fund (EPF) has gone through immense trials and tribulations for the past two years.

The provident fund has for the past two years, received much praise and flak both at the same time due to a variety of reasons.

Some condemn the i-Lestari, i-Sinar and i-Lestari withdrawal schemes while others praise it to the moon for helping the needy during the pandemic.

The world's top five provident fund is also receiving a lot of pressure as we speak, from so-called evangelical politicians who clamour for the EPF to allow a one-off withdrawal of RM10,000.

And now, the EPF will be under the microscope once again in the next few weeks or even days as it is set announce its 2021 dividend soon.

So what will it be? Will it be higher than last year's 5.2 percent indicating that the year of the tiger is already roaring?

Or will it be negative dividend growth indicating that Malaysia is still not out of the woods?

Associate Professor Dr Ahmed Razman Abdul Latiff thinks that the EPF dividend in 2021 is likely to remain the same like in 2020 where it was 5.2 percent for conventional and 4.9 percent for the shariah.

"There are many reasons for this. A majority of the investment is in the fixed income (46 percent) followed by equity (42 percent).

Last year, returns from fixed income is around 2 percent only and the FTSE Bursa Malaysia Kuala Lumpur Composite Index's performance during last year was also negative, at around -3.7 percent," Razman told DagangNews.com.

The Universiti Putra Malaysia Putra Business School senior lecturer said real estate performance is not good either due to COVID-19.

"The only positive contribution is probably coming from global investments, which constituted 33% of EPF total investment.

Razman added in 2020, for every 1 percent dividend, EPF require around RM9.22 billion to distribute to its members.

"So in 2021 the amount will be higher, maybe close to RM10 billion due to higher contributions from its 13 million members," said Razman.

He added if EPF pays out a 5.2 percent dividend, it will require EPF to commit more than RM50 billion from it income for the purpose of dividend distribution.

In 2020, EPF recorded RM60.98 billion of income so it is possible for EPF to maintain its dividend at 5.2 percent for 2021.

Meanwhile Dr Muhammad Iqmal Hisham Kanaruddin also expects EPF which has assets of some RM1 trillion to give a dividend of 5 percent.

"But in 2021, there were a lot of the withdrawal schemes such as i-Sinar and i-Lestari and this will affect EPF's asset position which were liquidated," Iqmal told DagangNews.com.

The Universiti Sains Islam Malaysia Faculty of Economics and Muamalat senior lecturer said the economy in 2021 is better compared to 2020 but most of the assets circulate in the domestic market which led to a still weak stock market.

So what will the dividend be in 2021? Let's just wait and see. - DagangNews.com