KUALA LUMPUR: The Employees Provident Fund (EPF) has rubbished claims that returns from non-Syariah investments were used to prop up dividends for Syariah savings.
The retirement fund said its Syariah savings scheme operates separately from its Conventional savings scheme.
"The Syariah savings derives its income solely from its portion of the Syariah portfolio, while income for the Conventional savings is generated by both the Syariah and Conventional portfolios," EPF told Business Times.
Last week, EPF announced a dividend of 5.5 per cent for Conventional savings last year, involving a total payout of RM50.33 billion.
A dividend of 5.4 per cent for Syariah savings will see a payout of RM7.48 billion, bringing the combined total payout for last year to RM57.81 billion.
The dividend payments mark a significant increase from 2022, where the dividend rates were at 5.35 per cent for Conventional savings and 4.75 per cent for Syariah savings.
This led to claims on social media that income derived from the Conventional savings scheme may have been used to boost dividends for the Syariah savings scheme.
EPF said today its Syariah Income Ratio (SIR) policy, for the sharing of income between Conventional and Syariah savings, has been in place and unchanged since its introduction in 2017.
It said there were several factors behind the smaller gap between the dividends for Syariah and Conventional savings for last year.
It said in 2022, the Syariah portfolio recorded significant equity write-downs totalling RM2.54 billion. This led to a much lower dividend payout of 4.75 per cent for the year.
"The higher write-down resulted in improved portfolio health for syariah (last year), which allowed more opportunity to realise gains as markets recover."
EPF further explained that improved portfolio health, coupled with a rally in Syariah-compliant technology equities in the United States and lower write-downs last year contributed to a more significant improvement in Syariah savings scheme dividends compared with conventional savings.