Malaysia Employee Provident Fund (EPF) Dividend Rate Since Year 1983

Source: Fortune Sense

Do you know the EPF dividend rate since year 1983 ? The information is as below :




Year - Dividend

2008 4.5
2007 5.8
2006 5.15
2005 5
2004 4.75
2003 4.5
2002 4.25
2001 5
2000 6
1999 6.84
1998 6.7
1997 6.7
1996 7.7
1995 7.5
1988 - 1994 8
1983 - 1987 8.5

The return rate is higher than the fixed deposit rate but it seems lower than the Amanah Saham Wawasan (ASW 2020) and Amanah Saham Malaysia (ASM). You are able to invest in these two schemes by using your EPF account. Do think of it if you do not know about it, based on the statistic, these two schemes, ASW 2020 and ASM provide higher return rate.

Is your EPF money enough for retirement?

Sources: Wednesday July 15, 2009
Is your EPF money enough for retirement?
by Ooi Kok Hwa



A look at whether a retiree can survive after losing monthly income and with only EPF savings to rely on


SOME studies conducted in Malaysia have shown that most retirees spend all their EPF money within three years of their retirement. Given that the average lifespan for a Malaysian is 75 years, if we retire at 55 and spend all our EPF money within three years, a lot of us will be wondering how to survive from 58 to 75.

The most worrying question that most of us will be asking is how to survive retirement when we lose our steady stream of monthly income to cover our daily expenses.

However, if we have been building an investment portfolio apart from EPF money, we would not be able to generate a source of returns from our own investment portfolio.

In reality, a lot of us have been spending most of our savings, including part of our EPF savings on our children’s education and clearing debts on house and car purchases, which leave us with not much savings for our retirement.

With this general concern in mind, let’s look into how much of our EPF money we can afford to spend to have enough for our retirement based on the our local conditions and some assumptions.

Generally, an average Malaysian starts working at 25 and reaches retirement at 55 (after 30 years of working), thereafter living the remaining 20 years (until 75) relying on the EPF savings.

We will assume a starting pay of RM1,500, growing at the rate of 8% per annum; an average bonus of two months per annum, average EPF returns of 5%, total EPF contribution of 23% (employer: 12%, employee: 11%) and inflation rate of 3%.

Our main objective is to test how much EPF money we can spend until we use it all up.

Our analysis shows that if we are able to live with just one-third (or 33%) of our last drawn salary, the EPF money should be able to support us for 20 years until we pass away at 75.

From the example below, if a person’s last drawn salary is RM13,976 at 55, he can only afford to spend one-third or RM4,612 per month after retirement (1/3 x RM13,976).

However, if his spending exceeds the one-third level, such as 50% or the full amount of his last drawn salary, his EPF money can only last 12 or five years respectively.

Even though our computations are based on a lot of assumptions and hypothetical scenarios, our objective is to bring to your attention that we need to be careful in spending our EPF money and control our expenses once we retire.

We will need to adjust our lifestyle after our retirement, especially for those of us that are used to spending most of our take-home pay when we are still working.

Once we lose the regular income source and are relying just on the savings, we will need to plan carefully in order not to out-live our savings. In this example, we can only afford to spend 33% of our last salary after retirement!

Everyone has different financial situations. However, we need to plan for our retirement. If possible, we need to build our own investment portfolio apart from the EPF savings. We may need to seek some part-time jobs after retirement if our financial resources do not permit us to stop working. Besides, we need to clear all our outstanding debts before retirement.

We also need to buy enough life and medical insurance for ourselves as well as set up education funds for our children.

Last but not least, one important point to note is that our computation is based on the assumption that we are still able to generate 5% returns after retirement.

Unless we have the skills and knowledge to generate the returns, putting the money back in EPF and letting EPF generate returns may be a good option. For the average person, we feel that it is not easy to generate 5% returns annually over a long period of time.

● Ooi Kok Hwa is an investment adviser and managing partner of MRR Consulting.

EPF equities value surges

Sources: IZWAN IDRIS ( TheStar Online)



PETALING JAYA: The value of equities held by the Employees Provident Fund (EPF) rose faster than the market over the past six months as the fund increased its stakes in battered stocks and rode on the rally that lifted share prices from their lows in March.

The latest publicly available data showed that the market value of EPF’s top 15 holdings had risen 23% since the start of the year, compared with the 21% gain in the FBM KLCI as of last week.

As a pension fund, the EPF follows a strict conservative strategy in managing its funds that had swelled to RM356bil as of the end of March.

About a quarter of this money is invested in equities, but only a fraction is allowed for overseas investment.

“Contrary to popular belief, the EPF is quite aggressive in managing its stock portfolio,’’ said a senior fund manager with a local asset firm.

EPF’s most valuable shareholding is its 930 million shares, or 15.5% stake in Sime Darby Bhd, which is also the most expensive stock in terms of market value on Bursa Malaysia.

Its current stake in Sime Darby is less than the 15.7% reported as at end of last year.

Despite the slight decrease, the value of EPF’s stake in Sime Darby had increased to RM6.67bil as at the end of June compared with RM4.97bil at the start of the year after the stock climbed 38% over the same period.

Filings with Bursa Malaysia in the past months showed that the EPF’s stake in Sime Darby fluctuated by as many as three million shares a day.

Conservative estimates of the fund’s transactions put it at about 20% of the stock’s daily volumes.

The fund is also active in buying and selling shares in other big companies where it owns substantial stakes in Tenaga Nasional Bhd, Malayan Banking Bhd and IOI Corp Bhd.

Bloomberg data showed that the EPF has stakes exceeding 10% in 47 companies as at last week.

However, there were little change in terms of the fund’s equity stakes in the country’s biggest firms over the past six months, except for Axiata Group Bhd, formerly known as TM International Bhd.

EPF’s current top 15 shareholdings have a market value of about RM55bil against RM43.7bil six months ago.

Analysts said a rising market provided the opportunity for funds like the EPF to make trading profit on stocks.

This may help boost returns from investments at a time when companies are expected to pay lower dividends as their profits shrink.

EPF had warned that this year’s dividend payout to contributors may be less than the 4.5% paid for 2008.

It has to guarantee a minimum payout of at least 2.5% every year as its fund size grows at about 7% and 10% rate annually.

Currently, the EPF is invested in more than 100 companies on Bursa Malaysia, with its 67% in Malaysian Building Society Bhd and 57% in RHB Capital Bhd comprising its biggest stakes.

The total market capitalisation of just over 950 companies on Bursa Malaysia stood at RM817bil as at end-June.

While the fund’s stakes in the country’s biggest firms remain relatively stable, it has been increasing its shares in a number of mid-size companies.

Among stocks that saw a significant jump in EPF investment so far this year was WCT Bhd.

The pension fund started the year with a 20% stake in the construction group but took advantage of a steep price plunge in January to buy more shares, raising its equity stake to 26% by end-June.

Latest filings showed that the EPF owned 25.16% of the company as at July 6.

Shares in WCT closed at RM2.23 yesterday, up 47% year-to-date.

The stock, however, was down 61% from a peak of RM4.98 achieved on Jan 11 last year.

EPF’s stake in WCT is currently worth about RM430mil compared with RM220mil at the start of the year.

The fund did not disclose the amount paid for the additional stakes in its filings with Bursa.

Other mid-sized firms that saw increased EPF interest are oil and gas counters like Dialog Group Bhd and KNM Group Bhd.

The two stocks had posted strong double digit gains this year from their recent lows in March.