THE Employees Provident Fund (EPF) has beaten the 5.2%-6% estimates of analysts/economists by declaring a conventional savings dividend of 6.1% for 2021.
Together with the dividend for shariah savings for 2021 that comes in at 5.65%, the retirement fund has beaten the 5.45% (conventional) and 5% (shariah) declared in pre-pandemic 2019.
Last year, amid a pandemic-stricken economy, EPF declared a dividend of 5.2% for conventional savings and 4.9% dividend for shariah savings.
Despite unprecedented COVID-19-related withdrawals eroding growth in EPF’s fund size, total distributions beat the previous high of RM48.13 bil in 2017 with an all-time high of RM56.8 bil.
For comparison, EPF doled out dividend payout for its conventional savings at 5.8% in 2010 followed by 6% (2011), 6.15% (2012), 6.35% (2013), 6.75% (2014), 6.4% (2015), 5.7% (2016), 6.9% (2017), 6.15% (2018), 5.45% (2019) and 5.2% (2020).
According to the EPF, its overall investment assets grew to RM1.01 tril in 2021, up 0.8% year-on-year (yoy) from RM1 tril in 2020. In February 2021, the EPF said its overall investment assets grew 7.9% to RM998 bil from RM924.75 bil in 2019.
Despite strong investment performance, the significantly slower growth in its total investment assets was attributed to COVID-19-related withdrawals, including the unprecedented i-Sinar Account 1 withdrawals totalling RM58.7 bil.
Citing EPF data, theedgemarkets.com said some 7.3 million EPF members had applied for at least one or all three of the COVID-19-related special withdrawals – i-Lestari, i-Sinar and i-Citra – that collectively saw RM100.9 bil withdrawn from the EPF between April 2020 and February 2022.
The amount not saved with the EPF rises to RM110 bil when including the RM9 bil that was released to members because of the reduction in employees’ statutory contribution rate (from 11% to 7% from April to December 2020 and from 11% to 9% from January 2021 to June 2022).
In a statement late last year, EPF said the withdrawals had severely eroded retirement savings for a sizeable group of members. Around 6.1 million members had less than RM10,000 in their EPF accounts, out of which 3.6 million had less than RM1,000.
This is very much below the pension fund’s recommended basic for 20 years savings of RM240,000 which works out to only having RM1,000 a month after retirement.
This could prompt the number of aged persons needing government assistance to rapidly rise from 3.5 million in 2021 to 5.3 million (15% of population) by 2030 and 7.4 million (21% of population) by 2042. – March 2, 2022
