EPF’s 6.15% dividend ‘commendable’ despite challenges, say economists

 Barjoyai Bardai of the Malaysia University of Science and Technology says fluctuations in the US dollar significantly reduced the fund's overall returns.

The EPF declared a 6.15% dividend for both its conventional and shariah accounts for 2025 yesterday, slightly lower than the 6.3% declared for both accounts for 2024.

PETALING JAYA:

 A weaker US dollar and modest gains on Bursa Malaysia caused the Employees Provident Fund’s (EPF) dividend to ease to 6.15% for 2025 from 6.3% the previous year, although economists say the returns remain commendable given global market volatility.

Barjoyai Bardai of the Malaysia University of Science and Technology said fluctuations in the US dollar significantly reduced the EPF’s overall returns.

“More than 40% of EPF’s portfolio is invested US dollar-denominated foreign assets. Even though those investments gained substantial returns, the weaker exchange rate reduced net profits,” Barjoyai told FMT.

He said the ringgit strengthened by about 10.1% against the US dollar in 2025, reducing the value of overseas earnings when converted back into local currency.

Yesterday, EPF declared a 6.15% dividend for both its conventional and shariah accounts for 2025, slightly lower than the 6.3% declared for both accounts for 2024.

The retirement fund will distribute a total of RM79.6 billion in dividends to its members – RM67.1 billion to its conventional account holders and RM12.5 billion to its shariah account holders.

Barjoyai said market gains from Bursa Malaysia in 2025 were also less robust compared with 2024, when trading volume rose by about 2% last year, compared with an increase of more than 10% the year earlier.

“The lower trading volume affected overall returns, given that more than 36% of EPF’s portfolio is invested in local equities.

“Although profits were still good, they were lower than in 2024,” he said.

Returns highly commendable

Yeah Kim Leng of Sunway University described the 6.15% dividend as “highly commendable” and broadly in line with EPF’s historical average of around 6%.

“It remains competitive relative to foreign and local pension funds, as well as insurance and other investment funds,” he said.

He was referring to Permodalan Nasional Bhd’s 5.75 sen per unit dividend for Amanah Saham Bumiputera for 2025, and Tabung Haji’s 3.25% profit distribution for 2024

Yeah said the country’s headline inflation averaged 1.4% in 2025, meaning EPF’s 6.15% dividend translates into an inflation-adjusted return of about 4.75%.

“This level of real return means contributors’ purchasing power has been preserved, rather than eroded by inflation,” he said.

Despite financial market instability due to geopolitical tensions and armed conflicts, he said, the returns were not as badly affected.

“EPF managed to prevent any negative returns despite the global conflicts,” Yeah said. - FMT