On Saturday, the Employees Provident Fund (EPF) did something it has never done before in its 67-year history.
It declared two separate dividends.
The fund declared a 6.9% dividend for its conventional fund or Simpanan Konvensional, and 6.4% dividend for its newly launched Islamic fund, Simpanan Shariah.
This entails a RM44.15 billion payout for the former and RM3.98 billion for the latter.
But why is the Simpanan Shariah dividend lower than its conventional counterpart?
“In Shariah assets, we have no exposure whatsoever to the global conventional banking system, mainly global banks and global insurance companies.
“Those sectors outperformed in 2017 following a very bad year for them in 2016,” said EPF CEO, Datuk Shahril Ridza Ridzuan in a media briefing today.
Shahril said, global banks do not fit into the Shariah-compliant circle, and therefore returns from these investments could not be factored into the Simpanan Shariah dividends.
“A number of impairments that we took were primarily in Shariah stocks, in the oil and gas sector as well as the mobile telecommunications sector, primarily in Bursa Malaysia.
Simpanan Shariah take up slow to pick up?
Since it was first announced in June 2016, some 705,485 EPF contributors have opted to switch to Simpanan Shariah, from a total of roughly 14 million EPF contributors.
From the RM100 billion allocated for the scheme, only RM68 billion have been taken up in the past 20 months.
“Take up has actually been in line with our expectations. We provided for RM100 billion just in case demand was far in excess of what we had provided,” said Shahril.
He said after Simpanan Shariah was launched, the fund found that there were two sets of EPF members with two different priorities.
“In 2016 when we first launched, for the 700,000 people who switched first, they were the ones who were very keen on Shariah compliant products even though there was no dividend track record.
“They weren’t too worried about what the dividend is going to be, they just wanted a Shariah compliant product,” he says,
Will the lower dividend affect Simpanan Shariah take up?
Shahril says the 6.4% dividend announcement will in fact nudge some of the doubtful lot in the right direction.
He said the low take up so far may be due to those who were waiting to see what kind of dividend will the Simpanan Shariah bring, before making the jump.
In fact he said, ever since the dividend was announced on Saturday, there has been an increase in members showing up at EPF counters throughout Klang Valley and the East Coast who would like to switch to the Simpanan Shariah.
“We expect with our first Shariah dividend, the fence-sitters who would like to have a Shariah product, but are still focused on dividend, they will start to see that the dividend is actually quite okay and they’ll start to come in,” said Shahril.
Luqman Hariz
Mon Feb 12 2018
Although a Shariah compliant dividend was announced for the first time in history, it was noticeably lower than the conventional dividend EPF announced. - Photo by BERNAMA
ISIS Malaysia's perspective of Budget 2025
An excellent rakyat-centric budget under the overarching principle of a caring and humane economy.
Budget 2025: Record increase in STR, SARA aid initiatives
The government will provide a significant boost to the Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) initiatives next year.
Budget 2025: EPF contributions to be made mandatory for foreign workers – PM Anwar
The government plans to make it compulsory for all non-citizen workers to contribute to the Employees Provident Fund (EPF).
What policies to expect from Indonesia's new President Prabowo
Prabowo will be open to foreign investment, his aide has said, such as by offering investors management of airports and sea ports.
Budget 2025: Govt allocates RM470 mil to empower women's participation in PMKS
The Women's Leadership Apprenticeship Program will be intensified as an effort to produce more female corporate personalities.
Israel sends more troops into north Gaza, deepens raid
Residents of Jabalia in northern Gaza said Israeli tanks had reached the heart of the camp, using heavy air and ground fire.
Indonesia ramps up security ahead of Prabowo's inauguration
Prabowo Subianto will be sworn in as Indonesia's president on Sunday with Vice President-elect, Gibran Rakabuming Raka, also taking office.
Immediate allocation of RM150 mil for local authorities, DID to tackle flash floods
Datuk Seri Anwar Ibrahim said this allocation is intended to address the recent flash floods that hit the capital and several major towns.
Budget 2025: Sabah, Sarawak to continue receiving among highest allocations - PM
Sabah and Sarawak continues to be prioritised under Budget 2025, with allocations of RM6.7 billion and RM5.9 billion respectively.
NFOF will be operational in November 2024 with funding of RM1 bil
PM Anwar Ibrahim said NFOF will support venture capital fund managers to invest in startup companies with RM300 million set aside for 2025.
Minimum wage to increase to RM1,700 effective Feb 1, 2025
The Progressive Wage Policy would be fully enforced next year with an allocation of RM200 million, benefiting 50,000 workers.
Bursa Malaysia ends higher on Budget 2025 optimism
The benchmark index, which opened 1.85 points higher at 1,643.29, moved between 1,641.71 and 1,649.31 throughout the trading session.
Five important aspects relating to people’s lives in Budget 2025 - PM
The focus is on driving the MADANI Economy, speeding reforms, cutting red tape, raising wages, and tackling the cost of living.
Economic outlook: Govt plans to leverage, expand existing city transit system
The expansion aims to provide a more efficient and reliable public transportation network, reduce congestion, and improve accessibility.
Economic outlook: Budget 2025 to lay foundation for a digital-driven economy
The report said Budget 2025 will entail efforts to position Kuala Lumpur as a top 20 global startup hub by 2030 through the KL20 initiative.
Economic outlook: Corruption and lack of accountability hinder economic progress
Special Cabinet Committee on National governance is established to curb corruption, law reforms to modernise outdate regulations, MoF said.
National Wages Consultative Council will be strengthened
The govt will also incentivise hiring women returning from career breaks, offer job matching and improve care services facilities.
Economic outlook: Ensuring 11 years of compulsory education for all children
Budget 2025 will continue prioritising upskilling and retraining initiatives to equip workers with the latest skill sets necessary.
Consolidated public sector projected to record lower surplus of RM41.7 bil 2024
The MoF said the consolidated general government revenue is estimated to increase slightly to RM384.7 billion in 2024.
PM announces substantial Budget 2025 hastening Malaysia to become Asian economic powerhouse
Datuk Seri Anwar Ibrahim said it would create jobs and also tackle financial leakages to enhance public spending efficiency.