EPF’s Gross Investment Income Up 7.7% in First Nine Months of 2021

EPF’s Gross Investment Income Up 7.7% In First Nine Months of 2021

Good news for EPF holders in Malaysia as analysts are anticipating that the EPF payments might reach as high as 6%. For the year 2021, economists forecast a larger dividend payout for Employees Provident Fund (EPF) contributors.

The dividend for the previous year was 5.2 percent. Due to a 26 percent increase in nett investment income in the first nine months of 2021, EPF is likely to declare a dividend of around 6%. This is also attributed to positive performance in the domestic and global equity markets during the fourth quarter.

Although the withdrawal of RM67.6bil under the i-Sinar and i-Citra schemes had no effect on fund performance as of the third quarter of 2021, lingering concerns about further withdrawals and their potential long-term impact may limit a higher dividend payout.

 

Employment and Salary Recoupment Top Priority for Malaysians

Gaining employment and recouping salary cuts and income losses would be the top priority for the large number of Malaysians forced to dip into their EPF over the last two years, he said. Those approaching the mandatory retirement age may need to work longer, while retirees without sufficient savings may need to look for suitable job and income-generating opportunities.

 

Increased Government Measures to Increase Job Opportunities

To avert the looming “old age poverty” crisis, the government would need to increase social and development spending in order to increase job and income opportunities. The government will also need to focus on keeping living costs low and stable, as well as expand financial literacy programmes to encourage greater savings.

EPF should be able to match, if not outperform, the 2020 dividend rate in 2021, as total gross investment income stood at RM48.02bil for the first nine months of last year. This represents a 7.7 percent increase over the same period in 2020.

 

Increasing Retirement Age Not A Feasible Solution

EPF has remained committed to and guided by its Strategic Asset Allocation (SAA), which has enabled it to weather volatile market conditions. Those who are past retirement age should be encouraged to stay in their jobs based on their performance and health status. Contractual rehiring is a more efficient method than enforcing a general blanket increase in retirement age.

The two most frequently proposed solutions for providing income for older people are to force them to work longer hours or to force them to save more of their earnings while they are working. Forcing people to work past the age of 60 is not a viable solution in Malaysia, where 75 percent of the working-age population has no pension savings and only 3 percent of EPF holders meet the target retirement savings threshold.

It is estimated that 85 percent of adult Malaysians have insufficient or no pension. This includes seven million people, or roughly one-third of the working-age population, who are not in the labour force, as well as those who are already living in poverty in retirement.

For more information about EPF withdrawals, please refer to our Guide for EPF Withdrawals in Malaysia.