Malaysia’s EPF Declares Highest Dividend Since 2017 Amid Market Resilience

Malaysia‘s Employees Provident Fund (EPF) has announced a 6.3 per cent dividend for both its conventional and syariah savings accounts for 2024. This marks the fund’s highest payout since 2017 and the first time both accounts have recorded the same rate. The unexpected increase is expected to encourage more voluntary contributions from members.

The total distribution amounts to RM73.2 billion (S$22.2 billion), a sharp rise from the previous years rates of 5.5 per cent for conventional savings and 5.4 per cent for syariah savings. In 2017, the fund declared dividends of 6.9 per cent for conventional accounts and 6.4 per cent for syariah accounts. Historically, syariah account holders have received lower returns compared to their conventional counterparts.

Analysts noted that the 6.3 per cent dividend significantly exceeds Malaysias long-term annual inflation rate of 2.5 per cent, ensuring healthy savings growth. Despite the introduction of “Account 3” as a flexible withdrawal option, only 30 per cent of members under 55 have opted for this, suggesting a preference for long-term savings security.

EPF‘s membership exceeds 16 million, with over 8.8 million actively contributing, making up 51 per cent of Malaysia’s 17.3 million labour force. The active-to-inactive member ratio improved in 2024 to 54:46. Contributions rose 11 per cent to RM108.2 billion, reflecting an expanding member base and rising wages. Employer registrations increased, with 71,471 new companies joining, bringing the total to 614,563.

The strong dividend may boost voluntary contributions, given EPFs risk-free returns. However, concerns remain over depleted savings due to past withdrawal schemes. Experts suggest merging underperforming government-linked investment companies into a “Malaysia Superfund” to address pension challenges and establish a universal basic pension.

EPF has also faced scrutiny over its handling of Malaysia Airports Holdings (MAHB) shares, with lawmakers questioning an alleged RM700 million loss from selling shares at RM6.80 before repurchasing them for RM11. EPF executives were summoned on February 17 to explain the transaction, which led to MAHB‘s delisting on February 25 and involvement from BlackRock’s Global Infrastructure Partners.

The strong dividend performance was attributed to global and domestic market recovery, economic resilience, and sound portfolio management. EPF closed 2024 with an 11 per cent increase in investment income, reaching RM74.5 billion. Investment assets grew 10 per cent year-on-year to RM1.25 trillion.

Foreign investments, comprising just over a third of total assets, accounted for half of total returns. Domestic investments, which make up 63 per cent of the portfolio, delivered a nearly equivalent income share. Despite higher returns from foreign investments, EPF plans to continue prioritising domestic assets, allocating 70 to 80 per cent of new funds locally, in line with its Strategic Asset Allocation plan for 2025 to 2027.

In 2024, EPF deployed RM96.8 billion in new investments, with 82 per cent directed to domestic assets and 18 per cent to international markets. Equities remained the primary income driver, generating RM49.8 billion—two-thirds of total returns. Fixed income investments contributed RM21.9 billion, while real estate and infrastructure investments added RM1.6 billion.