Conventional Savings projected at 5.8-6.3%, Shariah at 5.5-6.0% based on nine-month investment performance
PETALING JAYA: The Employees Provident Fund (EPF) is anticipated to announce dividend rates ranging from 5.8 to 6.3 percent for Conventional Savings and 5.5 to 6.0 percent for Shariah Savings for 2025, according to financial analysts.
Samirul Ariff Othman, Senior Consultant at Global Asia Consulting, indicated that the projection aligns with robust investment income recorded during the first nine months of the year, though final distributions remain contingent upon the retirement fund’s profit realization protocols and long-term reserve obligations.
Speaking to Berita Harian, Samirul explained that the anticipated rates reflect both the strong performance during the initial three quarters and EPF’s governance framework, which prioritises fund sustainability over maximising short-term dividend payouts.
“Based on the nine-month performance and the EPF’s own realisation discipline and reserves, the expectation for the 2025 dividend is around 5.8 to 6.3 percent for Conventional Savings and around 5.5 to 6.0 percent for Shariah Savings,” he stated.
The consultant emphasised a crucial point that contributors must understand: not all market gains translate into distributable dividends, particularly unrealised gains that exist only on paper.
“The EPF insists that ‘mark-to-market’ gains, including those driven by foreign exchange and which have not been realised, cannot be distributed as dividends,” Samirul explained.
He noted that despite positive global market recovery trends, actual dividend figures depend on profits that have been genuinely realised and the necessity of maintaining adequate reserves for future stability.
“This factor directly limits the dividend ‘ceiling’, even though investment income appears high on paper,” he added.
Addressing the projected differential between Conventional and Shariah Savings rates, Samirul attributed the typically lower Shariah dividends to structural limitations within Islamic investment frameworks.
“A Shariah portfolio lacks conventional bonds, lacks flexibility in terms of certain risk protections and is more sensitive to equity cycles,” he clarified.
These investment constraints inherent to Shariah-compliant portfolios generally result in slightly reduced returns compared to conventional investment strategies, which have access to a broader range of financial instruments.
The projected 2025 rates would maintain EPF’s relatively stable dividend performance, continuing the pattern established in recent years. In 2024, both Conventional and Shariah Savings achieved matching rates of 6.30 percent, marking a notable convergence between the two savings categories.
Historical data shows EPF dividend rates have fluctuated based on market conditions and investment performance. In 2023, Conventional Savings delivered 5.50 percent while Shariah Savings provided 5.40 percent. The year 2022 saw rates of 5.35 percent for Conventional and 4.75 percent for Shariah accounts.
The most substantial recent performance came in 2021, when Conventional Savings reached 6.10 percent and Shariah Savings achieved 5.65 percent. Conversely, 2020’s pandemic-affected markets resulted in more modest returns of 5.20 percent for Conventional and 4.90 percent for Shariah portfolios.
EPF’s conservative approach to dividend distribution reflects its dual mandate: providing competitive returns to contributors while ensuring the long-term sustainability and financial health of Malaysia’s primary retirement savings institution.
