6.3% Dividend – Here’s Why EPF’s Unusual High Dividend Is Stunning, But Also Surprising And Suspicious

Financetwitter:


6.3% Dividend – Here’s Why EPF’s Unusual High Dividend Is Stunning, But Also Surprising And Suspicious


March 9th, 2025 by financetwitter



Who doesn’t like high dividend, especially when it benefits your retirement fund? But as the 8.78 million active members of the Employees Provident Fund (EPF) rejoiced over the 6.3% dividend for its 2024 financial year, many were also left wondering how the payout could skyrocket by a whopping 0.8% from 5.5% a year earlier (2023). The latest dividend is the highest since 2017, when the return rate was 6.9%.

Even more spectacular is the same return of 6.3% for both syariah and conventional savings – the first time since the syariah saving was introduced in 2017. The EPF had always paid lower dividends for syariah savings largely because it is forbidden from investments linked to “riba” (interest), “maysir” (gambling) and “gharar” (uncertainty in contract), which give higher yields.

The suspicion of hanky-panky that EPF could have silently diverted profits and dividend from Conventional to Syariah for political reason started last year, when the retirement fund announced dividends for conventional savings (5.5%) and syariah savings (5.4%) for financial year 2023 that saw a gap of only 0.1%, something which had never happened before.


It had nothing to do with jealousy because the syariah fund managers had suddenly become investment genius after underperforming since 2017 (fund managers managing syariah portfolio are not necessarily Muslims, mind you). Non-Muslims have no problem putting their money into syariah-compliant savings if it could generate higher dividends.

In fact, non-Muslims like ethnic Chinese don’t care whether a market instrument is syariah-compliant or not. The most important factor is the ROI (return on investment). They have been investing in Islamic banking with higher FD (fixed deposit) rate, for example. And if EPF Syariah savings can generate higher returns than Conventional, many would rush to the gold mind.

It’s not like the non-Muslims will be converted to Muslims if they put their money to work in Islamic banking or syariah savings. The Chinese are smart enough to keep religion and business or investment separate. This is one of the reasons why they are so good at doing business, as mixing religion with investment will limit their options and clouded their judgement.


The suspicion of a possibility of dividends exploitation or manipulation arose because the math doesn’t add up. While total investment income stunningly increased by 29% year-on year for the financial year ended Dec 31, 2023 – skyrocketing from RM51.91 billion in 2022 to RM66.99 billion – the Conventional dividend only increased by 0.15% compared to Syariah’s 0.65% jump.

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. This time, the Conventional dividend has increased by 0.8% compared to Syariah’s 0.9% jump, which still invites tonnes of questions, but not as bad as the previous year. However, something strange happens with 2024’s dividend distribution.

In 2023, the total payout – RM50.33 billion for conventional and RM7.48 billion for syariah – means after minus RM57.81 billion in dividends, EPF kept the remaining RM9.18 billion of income (86.3% payout). In 2024, however, EPF keeps only RM1.22 billionafter deducting a totaldividend ofRM73.24 billion from a total investment income of RM74.46 billion. That’s a mind-boggling 98.4% payout.


From 86.3% (2023) to 98.4% (2024) payout, it doesn’t take a genius to figure out why last year’s EPF dividend could skyrocket from 5.5% to 6.3%. Had EPF similarly paid 98% of its 2023’s total investment income, the dividend would be above 6% too. Clearly, Finance Minister Anwar had interfered – even manipulated – the 2024 dividend yield.

If it was not unusual for EPF to pay 98% out of its income as dividends, exactly why it only happens for financial year 2024, but not for the last 7 years from 2017 to 2023? If 2% or RM1.22 billion is more than enough to cover EPF’s operating cost and expenses, does that mean the retirement fund has been underpaying members for decades by plundering and robbing their hard-earned savings?

Due to a lack of transparency and the fact that EPF is not independent, but under the jurisdiction of the finance minister, the most important portfolio held by Prime Minister Anwar Ibrahim, it’s hard to deny the political reason leading to the sudden windfall. Sure, damn if the EPF dividend is low, damn if the EPF dividend is high. But we still need to know why, don’t we?


The most suspicious reason is to cover-up or to divert attention from the allegedly RM700 million losses which the Malaysia’s statutory pension fund had incurred by selling 163 million shares in Malaysia Airports Holdings (MAHB) – considered strategic or national asset – for as low as RM6.80 per share just months before buying them back for RM11 apiece in a privatisation deal.

It is still a mystery why EPF decided to slash its MAHB stake from 15.6% to 5.8% between December 2022 and December 2023, before then raising its stake to 30% as part of a consortium taking the Malaysian company private. Since the listing of MAHB in 1999, EPF has held shares in the company and had never reduced its holdings as drastically as it did in 2023.

Interestingly, Finance Minister II Amir Hamzah Azizan, who was EPF’s CEO during the period when the fund slashed its stake in MAHB up until he joined the Anwar Cabinet in December 2023, has denied any wrongdoing. But he couldn’t explain why EPF did not stop all trades in MAHB the moment it began working on the privatisation deal – suggesting insider trading had occurred.


While there’s little doubt someone had profited from the “sell-low buy-high” insider trading, 16-million members of EPF had incurred losses. So, that probably explains the low 5.5% dividend in 2023, and why the extraordinary 6.3% dividend had to be declared in 2024 to paint a rosy picture, as well as to silence the country’s Malay-Muslim majority due to the privatisation deal announced in May 2024 involving BlackRock, which has links to Israel.

Blowing his own trumpet, PM Anwar has claimed the EPF strong performance, which led to the stunning dividend, reflects investor confidence in his MADANI Government’s growth-friendly policies. He also bragged that fiscal reforms under the Madani Economic Framework have further strengthened this confidence, ultimately benefiting the people through universal and sustainable growth.

Based on his logic and self-flattering argument, does that mean his Madani government had spooked investor confidence and mismanaged the economy in 2023, which saw the EPF declaring the pathetic 5.5% dividend? Crucially, if the economy was booming and investors were super happy, why EPF nearly uses the entirety of EPF’s RM74.46 billion investment income to boost 2024’s dividend?


Another reason is to create a feel good factor before something bad or big is about to happen. The biggest crisis that would hit Anwar this year is the coming controversial house arrest for former Prime Minister Najib Razak. Expecting people’s anger to explode when the crook is released from the prison soon, the premier probably hopes that the high dividend could reduce the public’s discontent..

The upcoming scrapping of RON95 petrol subsidy is another bombshell in 2025 that will definitely spark a chain-reaction of skyrocketing inflation and people backlash. Hence, there’s a possibility that Mr Anwar might dissolve the parliament next year (2026) for a snap election. In the past, EPF had declared high dividend just before a national election to fish for votes.

Prior to the May 2018 General Election, EPF under then-PM Najib declared a 6.9% dividend in 2017 – a huge jump from 5.70% (2016). Likewise, before the 2008 General Election, the dividend was given a boost to 5.80% (2007) from 5.15% (2006). In the 2013 General Election, the dividend received a small bump, but nevertheless a sexy 6.15% payout (2012) to maintain a return rate above 6%.


In truth, EPF can declare dividends at least 8% as seen during Mahathir Mohamad administration: 1980-1982 (8%), 1983-1987 (8.5%) and 1988-1994 (8%). Even during the 1997-1998 Asian Financial Crisis, EPF declared 6.7% dividends. Therefore, the latest 6.3% payout is nothing to shout about when compared to the past record. But EPF too had its darker chapters.

During the same Asian Financial Crisis, then-PM Mahathir had formed a RM60 billion fund, sourced mainly from EPF, to bail out his cronies. As his privatization crumbled under the weight of incompetence, corruption and mismanagement during the crisis, companies like Indah Water Konsortium (IWK) was given soft “irrecoverable” loan amounted to RM1.4 billion, while MAS (Malaysia Airlines System) was also bailed out as it sat on a RM9.5 billion debt.

Other companies that enjoyed mega bailouts, just to name a few, included UEM, Malayan Banking, Bank Bumiputra, Sime Bank, KUB, Bank of Commerce, RHB Bank, Ekran’s Bakun Dam Project, Park May-Intrakota bus, Monorail, and even Konsortium Perkapalan Bhd – owned by Mahathir’s son Mirzan whose brilliant business acumen saw the company submerged in debts as much as RM1.7 billion.


Therefore, this is not the first time – and will not be the last – a prime minister uses EPF members’ money for political gains. Besides projecting himself as the PM who is doing a better job of managing the economy than any past prime ministers, Anwar also hopes his Islamic credential can be strengthened with the excellent dividend for Syariah savings.

The burning question is whether EPF under Anwar leadership can maintain its 6.3% dividend rate this year, the same way Mahathir had maintained 8% and above payout for a whopping 14 years from 1980 to 1994. Or will the premier blames President Trump and global economic uncertainties for a lower dividend?