THE Employees Provident Fund (EPF) announced today a dividend of 5.50 per cent for Simpanan Konvensional, with a total payout of RM50.33 billion and 5.40 per cent for Simpanan Shariah, with a total payout of RM7.48 billion, bringing the total payout for 2023 to RM57.81 billion.
For the year ended Dec 31 2023, the EPF recorded a total investment income of RM66.99 billion, a 29 per cent increase from RM51.91 billion in 2022.
The amount is net of listed equity write-downs recorded for the year.
Out of the RM66.99 billion in total investment income, RM5.72 million were generated from market-to-market gains of securities that have not been realised and will not be part of the dividend distribution.
It has been the EPF's prudent practice of paying dividends only out of realised income.
EPF's investment assets continued to record a strong growth to RM1,135.82 billion, an increase of 13 per cent compared to RM1,002.67 billion in 2022.
The increase comprised of income from the portfolio and healthy collection of contributions of RM97.56 billion in 2023, an increase of 15 per cent from RM84.78 billion in 2022.
EPF chairman Tan Sri Ahmad Badri Mohd Zahir said: "The EPF is able to deliver improved dividends following a resilient performance in 2023, with equities playing a significant role in driving overall performance.
"Despite the intensifying geopolitical tensions, elevated interest rates, inflation, regional conflicts, and China's property sector woes, the global economy showcased resilience and fared better than expected. This allowed the EPF to actively manage its diversified portfolio and capture opportunities to enhance returns."
Ahmad Badri said after netting off the inflation rate, the real dividend for Simpanan Konvensional was 2.89 and 2.51 per cent for Simpanan Shariah on a rolling three-year basis (2021 - 2023), exceeding the EPF's strategic target of at least 2.0 per cent real dividend over the same period.
"As a retirement fund, it is important for the EPF to consistently deliver long term above-inflation returns in order to preserve and enhance the value of its members' savings," he added.
The EPF's portfolio diversification and active fund management allowed it to deliver improved dividends for 2023.
The RM57.81 billion dividend distribution will benefit more than 16 million EPF members, encompassing individuals from both formal and informal sectors.
The year 2023 saw a mixed performance in the global equities market, particularly between Asean against the developed markets.
Developed markets equity benchmark indices saw positive growth, even as the US Federal Reserve raised the policy interest rates in its steepest hiking cycle since the 1980s to rein in inflationary pressures.
Regionally, the FBM KLCI and Asean indices both saw negative growth with the FBM KLCI declining 2.7 per cent.
Despite this decline, the EPF actively managed its portfolio to generate earnings from equities.
Ahmad Badri said the overall market volatility in 2023 underscored the importance of the EPF's robust investment strategy and prudent risk management.
He said the EPF's Strategic Asset Allocation (SAA) paired with active portfolio management enabled it to achieve the results for 2023.
In line with its SAA and prudent fund management, the EPF's ability to deliver stable dividends has helped establish its reputation as one of the country's trusted institutional investors.
This has also contributed to members' savings, ultimately translating into greater financial security during retirement years.
EPF's INVESTMENT PORTFOLIO PERFORMANCE IN 2023
The Equities asset class contributed RM39.05 billion after netting off write-downs, accounting for 58 per cent of the EPF's total investment income with a return on investment (ROI) of 8.68 per cent.
The increase in income, higher compared to RM27.12 billion in 2022, was mainly attributed to higher capital gains following better market conditions.
Listed equity write-downs for 2023 were minimal at RM0.40 billion, compared to RM3.43 billion recorded in 2022. Private Equity investments generated an ROI of 9.69 per cent.
Fixed Income instruments, predominantly Malaysian Government Securities, continued to be the anchor for the portfolio in maintaining steady returns.
The asset class contributed RM19.74 billion, or 30 per cent of the EPF's total investment income, yielding an ROI of 4.41 per cent.
The higher income recorded compared to 2022 of RM18.15 billion is in line with the growing asset size and is mainly contributed by interest and profit income from bonds and sukuk, respectively.
Real Estate and Infrastructure registered an income of RM6.03 billion, 8.0 per cent or RM0.43 billion higher compared to 2022 income of RM5.60 billion, recording an ROI of 5.04 per cent.
Income from Money Market instruments was RM2.17 billion, more than double the income generated in 2022, owing to higher money market balances and foreign currency translation, delivering an ROI of 4.93 per cent.
Fixed Income instruments made up 46 per cent of investment assets, while Equities comprised 42 per cent.
Real Estate and Infrastructure as well as Money Market instruments made up 7.0 and 5.0 per cent of EPF assets, respectively.
As of December 2023, the EPF's investment assets stood at RM1,135.82 billion, of which 62 per cent was invested domestically.