EPF’s 6.15% dividend for 2018 is a great achievement

The previous CEO of the Employees Provident Fund (EPF) was good and a good CEO can do a lot, regardless of which company he’s heading.

We will only know how the new CEO fares in a year or two going by the results the fund achieves.

EPF announced their payout for 2018 in February and reactions were mixed to say the least.

It’s high! Some were happy with the dividend because it was 50% higher than any fixed deposit rate.

It’s low! Some said it was too low because their returns from other investments were higher.

Reported in all media outlets: The Employees Provident Fund (EPF) has declared a dividend rate of 6.15% for conventional savings, with a payout amounting to RM43 billion.

EPF also declared a 5.9% dividend rate for syariah savings, with a payout amounting to RM4.32 billion.

In total, the payout for 2018 totalled RM47.31 billion – a marginal decrease of 1.7% from 2017.

In a statement, it said, “With a real dividend of 3.93% for conventional savings and 3.68% for syariah savings on a rolling three-year basis respectively, the EPF has exceeded its mandate of delivering a dividend of at least 2.5% on a yearly basis and at least 2% real dividend on a rolling three-year basis.”

EPF chairman Tan Sri Samsudin Osman added, “More importantly, we consistently deliver above-inflation returns to preserve and increase the value of our members’ savings over the long term and help them to achieve a better retirement future.”

2018 was a difficult year due to the downtrend in global markets from the US-China trade war and four rounds of US interest rate hikes in the year alone.

Equities continued to be the main contributor of income last year with 57.55%, amounting to RM29.28 billion.

According to an article in TheStar, EPF declared a dividend rate of 6.9% for conventional savings and 6.4% for syariah savings in 2017.

An old friend just came back from overseas, asked this question: “The 6.15% declared by the EPF is based on the amount in the account for 2018 or for the WHOLE account? Sorry for asking this silly question.”

Seriously, there’s no such thing as a silly question. Anyway, the 6.15% is based on the TOTAL amount.

So, if you have RM100,000 in the account now, you will have a dividend of RM6,150 for the whole of RM100,000.

We must understand that EPF works hard too. They are definitely more qualified than the majority of us, so if they have done well, we get higher dividends. Period.

This article first appeared in kopiandproperty.com

Charles Tan blogs at property investment site kopiandproperty. He dislikes property speculators and disagrees that renting is better than buying. He thinks it’s either property or poverty. He is presently the CEO of an auction house auctioning assets beyond just properties.