KUALA LUMPUR - Malaysia's largest pension fund on Saturday (Feb 22) announced a dividend payout of 5.45 per cent, the lowest in over a decade.
The announcement means that the Employees Provident Fund (EPF) has joined other state funds in slashing annual dividends to below the 6 per cent psychological benchmark for a healthy return.
It confirms a Straits Times report on Friday that EPF would declare a rate not higher than 5.5 per cent - the lowest since the 2008 Global Financial Crisis - in return for the statutory savings of 14.5 million workers.
"As anticipated, we saw substantially more volatility in 2019 as compared to 2018," chief EPF officer Alizakri Alias said in a statement on Saturday.
"Certainly 2019 exemplified what it means to be living in a VUCA (volatility, uncertainty, complexity and ambiguity) world. Many issues in the global markets remained unresolved, but we also saw some new issues cropping up."
These were three rate cuts made by the US Federal Reserve, the escalation of the United States-China trade war, and uncertainties surrounding the Brexit negotiations, he said.
"We expect that 2020 is going to be just as or even more challenging than 2019, with the full impact of the Covid-19 virus likely to drag down already soft global growth."
Saturday's announcement will likely add further pressure on the Pakatan Harapan government, which has been blamed for low dividends announced by state-managed investments since it took over power in an unprecedented election victory in 2018.
The EPF, which manages over RM800 billion (S$267 billion) in assets, declared a dividend of 6.15 per cent for the 2018 financial year and a whopping 6.9 per cent before that, an announcement which came weeks before the general election. It was the highest rate since 1996.
