High EPF Dividend Boosts Confidence In Malaysia's Market, Investment – Economists

By Nur Athirah Mohd Shaharuddin

KUALA LUMPUR, March 2 (Bernama) -- The Employees Provident Fund’s (EPF) decision to declare a 6.30 per cent dividend for both conventional and shariah savings for 2024 will bolster confidence in the capital market and investment sector, an economist said.  

International Islamic University Malaysia (IIUM) Associate Professor of Economics Dr Muhammad Irwan Ariffin said EPF’s strong investment performance reflects the resilience of the Malaysian market.  

“This enhances investor confidence, including among foreign investors, potentially increasing investment in projects that benefit the economy,” he told Bernama.  

Muhammad Irwan said, despite global economic uncertainty, EPF remains well-positioned as an investment entity due to its diversified yet balanced portfolio, comprising 63 per cent local and 37 per cent international investments.  

“Both contribute almost equally to investment income—49.7 per cent and 50.3 per cent, respectively. This strategy has been effective in managing risks while capitalising on global opportunities.”  

He said prudent investment decisions and strategic asset diversification would be crucial for EPF to navigate future economic uncertainties.  

Higher Dividend on Market Recovery

Yesterday, EPF announced a higher dividend rate of 6.30 per cent for both conventional and shariah savings for 2024, bringing the total payout to RM73.24 billion. The performance was attributed to a recovery in global and domestic markets, resilient economic growth, and sound portfolio management.  

For the financial year ended Dec 31, 2024, EPF recorded total investment income of RM74.46 billion, up 11 per cent from RM66.99 billion in 2023.  

As of September 2024, EPF managed investment assets totalling RM1.22 trillion, with 62.2 per cent allocated to Malaysian investments and 37.8 per cent to international markets.  

Muhammad Irwan said EPF’s diversified investment strategy had delivered stable returns despite market volatility.  

“By diversifying across equities, fixed-income securities, real estate, and alternative assets, EPF mitigates risks from any single market or sector.

“This approach has helped cushion the fund from global downturns while capitalising on emerging opportunities,” he said.  

He noted that EPF’s local investment strategy supports Malaysian economic growth, which stood at 5.1 per cent in 2024, ensuring sustainable long-term benefits for contributors.  

Meanwhile, he said global exposure allows EPF to benefit from stronger-performing economies, mitigating the impact of domestic and regional slowdowns.  

Ongoing risk assessments and strategic asset allocations—particularly in equity investments across Malaysian and international markets—are crucial to maintaining long-term sustainability amid geopolitical tensions, inflation, and financial market fluctuations, he added.  

Retirement Savings Confidence Boosted

Muhammad Irwan said the strong dividend rate since 2017 reinforces confidence in EPF as a retirement savings vehicle and may encourage more voluntary contributions from both private and public sector workers.  

“This could support long-term financial security as Malaysia transitions into an ageing nation, reducing dependence on government social safety nets,” he said.  

“For retirees, the high dividend injects more disposable income into the economy, driving consumer spending, which in turn stimulates demand for goods and services. This benefits industries such as retail, tourism, and food and beverages.”  

However, he cautioned that higher EPF dividends could contribute to inflationary pressures, particularly in sectors with supply constraints.

“The government, particularly Bank Negara Malaysia, should monitor inflation closely in the coming months,” he said.  

EPF’s Track Record of Strong Performance

Malaysia University of Science and Technology economist Prof Dr Barjoyai Bardai said EPF remains the country’s most reliable investment option.  

He highlighted that nearly 10 million contributors place their trust in its performance, hoping it will enable them to retire comfortably.  

“EPF has consistently excelled, positioning itself as the best investment alternative. Managing over RM1 trillion, it has continued to enhance performance despite its growing size.  

“Between 1983 and 1987, EPF declared its highest dividend rate of 8.5 per cent. Given its current strong performance, it may be able to achieve this again in the future,” he added.  

-- BERNAMA