KUALA LUMPUR: The Employees Provident Fund (EPF) is expected to sustain its high payout ratio by declaring a higher dividend payout for 2014 compared with 6.35% for 2013 and 6.15% for 2012, said a source.
The source said the dividend rate for 2014 is likely to range between 6.4% and 6.7%.
The dividend rate of 6.35% for 2013 was declared on the back of a record gross investment income of RM35 billion, a 12.8% rise from RM31.02 billion in 2012.
EPF chief executive officer Datuk Shahril Ridza Ridzuan said the pension fund will make an announcement on its dividend rate for 2014 next week.
“We will call for a briefing and make the announcement next week,” he told The Edge Financial Daily when met yesterday.
However, he declined to give any indication of the performance of the fund for the last quarter of 2014 (4Q 2014).
The EPF delivered investment income of RM10.32 billion for the third quarter ended Sept 30, 2014 (3Q 2014), up RM205.58 million from RM10.11 billion in 3Q 2013. The 3Q14 performance was driven mainly by equity investments, with the asset class contributing 61% to the total quarterly investment income.
The EPF in November last year said it aimed to provide at least 2% of real returns to members over a three-year rolling period.
A higher dividend rate announcement for 2014 will come as a welcome surprise to many despite the lackluster performance of the FBM KLCI last year. In November, Shahril had also warned that both the domestic and global equity markets had started to show signs of greater volatility when announcing the fund’s 3Q 2014 investment results.
FBM KLCI fell 6.27% to reach 1,761.89 points in the second half of 2014 compared with the first half when the benchmark rose 1.61% to reach 1,882.76 points.
For the first half of 2014, the EPF posted a 30% total income growth to RM19.23 billion from RM14.77 billion a year ago. Its investment assets also grew by RM58.94 billion to RM612.41 billion in the six months ended June 30, 2014.
The source said expectation of a higher dividend declaration for 2014 by the EPF will come in tandem with the higher rates that were announced by Lembaga Tabung Haji (LTH) last month.
LTH announced a 2014 depositors bonus comprising 6.25% annual bonus and an additional 2% Haj Bonus (for pilgrims who have not perfomed their haj yet).
To recap, Shahril in November had said EPF’s equity portfolio continued to deliver strong performance for two consecutive quarters of 2014, but had noted that the FBM KLCI had hit below the 1,800-point level in October.
He had also noted that the International Monetary Fund had downgraded its 2015 outlook for global economic growth, which was reflective of the more difficult conditions surrounding markets in 4Q 2014.
The EPF has 14 million members.
This article first appeared in The Edge Financial Daily, on February 5, 2015.
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