The “big day” is approaching—could EPF’s dividend rate reach as high as 6.3%?

(Kuala Lumpur, Feb 5)
Based on patterns over the past four years (2022–2025), the Employees Provident Fund (EPF) typically announces its annual dividend rates in early March. Market attention is now focused on how much EPF will distribute this year.

Senior consultant Samirul from Global Asia Consulting told local media that the conventional savings account dividend is expected to range between 5.8% and 6.3%, while the Shariah savings account dividend is projected at 5.5% to 6.0%.

He said the forecast aligns with EPF’s strong investment income recorded over the first nine months of the year, though final dividends will still depend on the pace of realised gains and the fund’s long-term reserve requirements.

According to Samirul, given the robust nine-month performance and EPF’s emphasis on sustainability-focused governance, the projected range appears reasonable.

Not all gains are distributable

Samirul stressed that EPF members should understand that not all market gains can be distributed as dividends, particularly unrealised paper gains.

“EPF has repeatedly highlighted that mark-to-market gains, including those driven by currency movements, cannot be distributed unless they are realised,” he said.

While global markets have shown signs of recovery, he added that dividend levels remain constrained by realised profits and the portion of income that must be retained as reserves.

Shariah dividend gap is structural

On the difference between conventional and Shariah dividends, Samirul explained that Shariah savings accounts typically offer slightly lower returns due to structural investment constraints.

“Shariah portfolios exclude conventional bonds, have less flexibility in certain hedging instruments, and are more sensitive to equity market cycles.”

He noted that the gap may be narrow during market recovery years, but in periods of heightened global uncertainty—such as 2025—a difference of 0.2 to 0.3 percentage points is normal.

Caution against over-distribution

Despite strong performance in the first nine months, Samirul dismissed market expectations of dividends reaching 6.5% or even 7.0%.

“EPF’s role is not to maximise dividends in any single year, but to safeguard sustainable long-term returns.”

He pointed out that with the fund’s size exceeding RM1 trillion, a maturing contributor base, and stricter reserve requirements, EPF remains highly sensitive to the risks of over-distribution.

“From a pension fund governance perspective, a conventional dividend range of 5.8% to 6.3% is already competitive without compromising reserve discipline.”

EPF’s investment income for the first nine months of 2025 stood at RM63.99 billion, up 11% year-on-year from RM57.57 billion, reflecting continued earnings resilience.