Malaysia's pension fund paying lowest dividend since 2008

KUALA LUMPUR • Malaysia's Employees Provident Fund (EPF), the country's largest pension fund, has announced a 5.45 per cent dividend payout for last year - the lowest in more than a decade.

The announcement yesterday means that the EPF has joined other state funds in slashing annual dividends to below the 6 per cent psychological benchmark in Malaysia for a healthy return.

The rate is the lowest since the 2008 global financial crisis for the statutory savings of 14.5 million workers.

"As anticipated, we saw substantially more volatility in 2019 as compared with 2018," chief EPF officer Alizakri Alias said in a statement.

The EPF, which manages over RM800 billion (S$269 billion) in assets, declared a dividend of 6.15 per cent for the 2018 financial year and 6.9 per cent before that, an announcement which came weeks before the general election - the highest rate paid out since 1996.

"Certainly 2019 exemplified what it means to be living in a Vuca (volatile, uncertain, complex and ambiguous) world. Many issues in the global markets remained unresolved, but we also saw some new issues cropping up."

These were three rate cuts made by the US Federal Reserve, the escalation of the United States-China trade war, and uncertainties surrounding the Brexit talks, he said.

"We expect 2020... to be even more challenging... with the full impact of the Covid-19 virus likely to drag down already soft global growth," Mr Alizakri said.

Yesterday's announcement will likely add further pressure on the Pakatan Harapan government, which has been blamed for low dividends announced by state-managed investments since it took power in 2018.

Hazlin Hassan

A version of this article appeared in the print edition of The Sunday Times on February 23, 2020, with the headline 'Malaysia's pension fund paying lowest dividend since 2008'. Subscribe