EPF Posts Stronger Performance Amid Economic Rebound, Focuses On Rebuilding Members’ Savings

KUALA LUMPUR, 2 March 2022: The Employees Provident Fund (EPF) Board today announced a dividend rate of 6.10% for Simpanan Konvensional, with a total payout of RM50.45 billion; and 5.65% for Simpanan Shariah, with total payout of RM6.27 billion, bringing total payout amount for 2021 to RM56.72 billion.

EPF Chairman Tan Sri Ahmad Badri Mohd Zahir said, “Alhamdulillah, the EPF had managed to keep it steady for the year 2021 and remained resilient, due in part to our healthy and globally diversified portfolio.

“The RM101 billion pandemic-related withdrawals since the year 2020 had resulted in 48% of EPF members having less than RM10,000 in their accounts. We hope that this dividend and our continued performance will help us begin the process of rebuilding our members’ retirement savings, as economic recovery takes shape over the course of the year,” he added.

According to him, the primary concern with the withdrawals was the impact on members’ retirement adequacy. However, despite the challenge of managing liquidity in the face of these outflows, the EPF had the capability and agility to respond with minimal impact to financial market.

For 2021, the EPF had rebalanced and managed its investment portfolios by acquiring shares that were fundamentally strong at attractive prices, as well as capitalising on its overseas investments, which contributed 56% to its overall returns.

As at 31 December 2021, the EPF recorded an increase of 6% in total gross investment income to RM67.06 billion from RM63.45 billion in 2020, driven by the progressive recovery of the equity markets and most asset classes amid the global rebound.

EPF’s investment portfolio in 2021

For 2021, the EPF recorded its first ever negative net contribution (contributions after withdrawals) in 20 years of RM58.2 billion, but remained steadfast and prudent in its long term investment strategies, while adapting to the challenges to ensure long term sustainable returns. The EPF recorded a gross investment income of RM67.06 billion, with RM6.91 billion allocated to Simpanan Shariah.

The performance was attributed to the EPF’s diversification approach as guided by its Strategic Asset Allocation (SAA), which has kept the Fund resilient to financial shocks and remain stable in unprecedented situations. By asset class, Fixed Income instruments made up 45% of investments, while Equities comprised 44%. Real Estate and Infrastructure as well as Money Market instruments made up 6% and 5% of EPF assets, respectively.

The continued market recovery in 2021, particularly in the developed markets, contributed to the EPF’s listed equity portfolios, providing opportunities for it to realise profits. Equities,
particularly foreign listed equities, which recorded a return on investment (ROI) of 10.44%, continued to be the driver of returns. Total income contributed by the Equity asset class was RM38.93 billion, or 58% of the EPF’s total gross income.\

The private equity portfolio also demonstrated strong performance, recording an ROI of 19.01%. To ensure long-term healthiness, the EPF took prudent measures to write down RM1.15 billion of its listed equity portfolio in 2021, which was lower than the RM7.71 billion write down recorded in 2020, in line with the broad recovery in the equity markets.

With almost half of the EPF’s total asset allocation in Fixed Income instruments, comprising Malaysian Government Securities and Equivalent, as well as Loans and Bonds, the retirement fund was able to maintain steady returns. Income from the portfolio contributed RM19.50 billion, or 29% of the EPF’s total gross income.

The Real Estate and Infrastructure portfolio’s income of RM7.69 billion continued to play a role as a hedge against inflation, recording an ROI of 6.53%, a spread of 1.84% above the ROI for Fixed Income instruments of 4.69%, whereas income from Money Market instruments came in at RM0.94 billion.

The EPF’s overseas assets were critical contributors to its overall performance, where different asset classes, markets, and currencies provided income stability and added value to the retirement fund’s overall return. As at December 2021, about 37% of EPF’s investment assets were outside of Malaysia across all asset classes. Overall investment assets grew 0.8% to RM1.01 trillion from RM1.00 trillion in 2020.

Membership base as at December 2021 grew by 2% to 15.2 million, while employers registered with the EPF stood at 553,000. With an average three-year real dividend after adjusting for inflation of 4.91% for Simpanan Konvensional, and 4.51% for Simpanan Shariah, the EPF had surpassed its strategic target of declaring an average real dividend of at least 2.00% on a rolling three-year basis.

The dividend payout for each savings was derived from total gross realised income for the year after deducting the net impairment on financial assets, cost write down on listed equities, unrealised losses due to foreign exchange rate and derivative prices, investment expenses, operating expenses, statutory charges as well as dividend on withdrawals.

Navigating challenges for sustainable returns and retirement wellbeing

The EPF believes that the reopening of economies and businesses, as well as various initiatives under the National Economic Recovery Plan, would provide fertile ground for the EPF to increase its investment efficiencies and leverage on the opportunities that a recovery brings.

To that end, the EPF will be increasing investment in the various domestic asset classes in 2022. As a major investor in Malaysia’s financial markets, this would help also catalyse economic activity and assist in the ongoing recovery of the economy.

The EPF’s internal data is already showing that the labour market is returning to health, with contribution data, member registrations, and active employers all returning to pre-pandemic levels in the fourth quarter of 2021. With international borders set to reopen and vaccination rates among the best in the world, Malaysia is poised for a rebound in 2022.

The crediting of the dividends for both Simpanan Konvensional and Simpanan Shariah will be completed on Sunday, 6 March 2022. Members may check their accounts via i-Akaun or get their statement from EPF kiosks nationwide.