The Employee Provident Fund (EPF) is a federal statutory body under the purview of the Ministry of Finance and is mandated to manage retirement savings of the Malaysian workforce in accordance with the EPF Act 1991. Datuk Wan Kamaruzaman Wan Ahmad, former Head of Treasury Dept at EPF for 5.5 years from 2007 – 2013 traces the statury body’s highs and lows for years 2023 and 2024.
Overarching Strategy
At the core of the strategic direction of the Employee Provident Fund (EPF) is its commitment to assist its members in achieving a better future through adequate and sustainable retirement income. This commitment is focused on five key priorities – improving adequacy, extending coverage, enhancing customer experience, delivering optimal yield and strengthening trust, which is reviewed annually to respond to members’ evolving needs.
EPF Facts at a Glance – 2023
Members = 16,073,317
Active members = 8,524,975 or 53%
Number of Contributing Employers = 606,187
Annual contributions received from Employees and Employers = RM97.56b
Total Withdrawals & Refunds = RM50.57b
•Operational & Business Efficiency is 22.9sen per RM100 AUM
•Retirement Well-being = 33% of active members meet basic savings by age.
•No of Branches = 68: 52 at Peninsula Malaysia, 9 at Sabah and Labuan and 7 in Sarawak
•Number of Staff = 5,537
•Total Employee Expenses = RM1.29 billion
•Total Operating Expenditures = RM1.81 billion
•EPF is the World’s 14th Largest Pension Fund.
Investment Performance
FY2023 witnessed significant global events that impacted the global economy, financial and currency markets. The Russian invasion of Ukraine added to inflationary pressures to the existing global supply chain disruption, causing a simultaneous food and energy crisis.
The global equity markets’ performance were mixed with indexes FTSE World Developed at +21.59%, FTSE ASEAN -2.09%, APAC Ex-Japan +4.60% n FBM KLCI -2.73%.
Higher inflation that led to higher interest rates, routed the bond market in most countries.
Despite these investment challenges, EPF diversification strategy continues to pay off with total gross investment income of RM67.39b up 21.80% fm 2022.
Dividend for Simpanan Konvensional (Conventional Savings) was 5.50% and Simpanan Shariah (Shariah Savings) at 5.40%, a commendable performance under these circumstances.
Total Assets of EPF
2019 – RM924.882b
2020 – RM1,003.372b
2021 – RM1,012.032b
2022 – RM1,008.312b
2023 – RM1,141.898b
Gross Investment Income
2019 – RM49.756b
2020 – RM55.743b
2021 – RM67.723b
2022 – RM51.909b
2023 – RM66.988b
Dividend Credited to Members
2019 – RM45.817b
2020 – RM47.642b
2021 – RM56.725b
2022 – RM51.138b
2023 – RM57.806b
Simpanan Konventional Dividend
2019 – 5.45%
2020 – 5.20%
2021 – 6.10%
2022 – 5.35%(RM45.4b)
2023 – 5.50%(RM50.33b)
Simpanan Shariah Dividend
2019 – 5.00%
2020 – 4.90%
2021 – 5.65%
2022 – 4.75% (RM5.70b)
2023 – 5.40% (RM7.48b)
Return on Investment
2019 – 5.71%
2020 – 6.13%
2021 – 6.50%
2022 – 6.20%
2023 – 6.36%
Total Withdrawals
2019 – RM44.776b
2020 – RM58.284b
2021 – RM131.078b
(i-Lestari, i-Sinar & i-Citra schemes)
2022 – RM91.025b**
(Special Withdrawal Facilities)
2023 – RM50.57b
Strategic Asset Allocation (SAA)
46% Fixed Income
42% Equities (plus PE)
7% Real Estate and Infra
5% Cash & Money Market
Fixed Income comprises MGS and Equivalent, Loan n Bonds. In 2023, FI contributed RM19.74b or 30% of total investment income yielding an ROI of 4.41%.
Equity portfolio comprises listed and private equity, contributing RM39.05b or 58% of income.
Equities portfolio achieved a strong ROI of 8.77%. Listed equity write downs for 2023 were minimal at RM0.40bil, compared to d RM3.43bil recorded in 2022.
Private equities ROI outperformed public equities and had a higher ROI of 9.69%. Overall ROI was 7.92%. Write down was RM3.43b for this asset class.
RE & Infrastructure recorded an investment income of RM6.03b or ROI of 5.04%.
Money market instruments totaled returns was RM2.17b or an ROI of 4.93%.
Domestic SAA = 62% or 702.48b
Overseas SAA = 38%
Domestic Income = 47% or 31.61b
Overseas Income = 53% or 35.28b
Overall ROI = 6.36%
Deployment of new money into domestic market is more that 80% of of 2023 investment allocation.
As at December 2023, EPF holds about 28% of the outstanding MGS and GII issuances and about 12% of the FTSE Bursa Msia Top 100 Index market capitalisation.
EPF participation in the Bursa Malaysia in terms of value was 23% for FBM100 stocks and 31% for FBMKLCI stocks. This includes trading by domestic external fund managers.
Active Members Savings Range as at 31 December 2023
•2.574m members have savings below 10k totaling RM12.0 billion
•2.567m members have savings between 10-50k totaling RM62.3 billion
•1.166m members have savings between 50-100k totaling RM84.2 billion
•1.372m members have savings between 100-250k totaling RM217.5 billion
•541,382 members have savings between 250-500k totaling RM186.4 billion
•217,223 members have saving between 500k-1m totaling RM147.5 billion
•90,334 members have savings above 1m totaling RM157.3 billion
• Total active members is 8,524,975 with savings totaling RM867.249b
• Male active members 4,646,149 and female 3,878,826.
EPF 2024 Performance
EPF declared a dividend rate of 6.30% for Simpanan Konventional, with a total payout of RM63.05 billion; and 6.30% for Simpanan Shariah, with a total payout of RM10.19 billion, bringing the total payout amount for 2024 to RM73.24 billion.
For the year ended 31 December 2024, the EPF recorded a total investment income of RM74.46 billion, 11% higher than the RM66.99 billion recorded in 2023.
EPF’s investment assets grew to RM1,249.71 billion, an increase of 10% fm RM1,135.82 billion in 2024. This increase was driven by portfolio income and net contributions of RM108.22 billion, an 11% increase fm RM97.56 billion in 2023.
This strong performance was driven by recovering global n domestic markets, resilient economic growth, and sound portfolio management.
The Malaysian economy expanded at 5.1% vs 3.6% in 2023 and FBM KLCI registered double-digit growth of 12.9% vs -2.7% in 2023.
Investment Portfolio Performance
The Equities asset class contributed RM49.79 billion, accounting for 67% of total investment income with an ROI of 9.90%.
Private Equity investments, which represents close to 10% of the equity investments, generated an ROI of 11.33%.
Fixed Income instruments contributed RM22.91 billion, or 29% of the total investment income, yielding an ROI of 4.27% vs RM19.74 billion in 2023, in line with the growing asset size.
Real Estate and Infrastructure registered an income of RM1.64 billion, recording an ROI of 5.13% on a constant currency basis.
Income from Money Market Instruments was RM1.12 billion, delivering an ROI of 1.89%, impacted by the Ringgit strength against US Dollar.
Fixed Income instruments made up 46.2% of investment assets, while Equities comprised 43.5%. Real Estate n Infrastructure as well as Money Market Instruments made up 6.3% and 4% of EPF assets, respectively.
Of the RM1,249.71 billion investment assets, 63% was invested domestically, generating RM37.02 billion, or 49.7% of total investment income. Global assets generated income of RM37.44 billion, or 50.3% of d total investment income recorded.
A total of RM63.59 billion out of d RM74.46 billion total investment income was generated for Simpanan Konvensional, and RM10.87 billion for Simpanan Shahriah.
Operationally, EPF recorded strong membership growth registering new members of 475,752, bringing EPF membership to 16.22 million, of which 8.78 were active members. This represents 51% of Malaysia’s 17.32 million labor force.
Total contributions in 2024 rose 11% to RM108.22 billion, reflecting increased number of members, wage growth and sustained trust in the EPF. New employer registrations stood at 71,471, bringing total registered employers to 614,563. – NMH
About the writer:
WKWA has more than 40 years working experience in the Malaysian financial markets as a currency trader, money broker, fund management and pension fund. He is currently the Chairman at MBSB Bank and MBSB Group. His was also the former CEO of KWAP, a Malaysian government pension fund. His favourite sign-off is: Once a trader always a trader!
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