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EPF’s 1Q2023 Performance: Impact on Dividends & Membership Growth

The Employees Provident Fund (EPF) has reported robust performance for the first quarter of 2023, with gross investment income of RM15.6 billion. Although this figure is slightly lower than the previous quarter and year, it still surpasses the five-year average for the quarter by 11.5%. The majority of the EPF’s assets, 63%, are invested in domestic markets, primarily in fixed income instruments, providing long-term income stability. The fund has also seen a growth in active members to 8.45 million, aided by a steady recovery in labour market conditions and policy support. The first quarter of 2023 saw the highest quarterly contributions to date, surpassing pre-pandemic figures with RM25.83 billion in gross contributions.

The EPF’s strong contributions suggest that there could be an additional RM10 billion to RM13 billion per quarter available for investment both domestically and overseas. If 70% of this additional cash is invested in the domestic market, it could result in an influx of RM28 billion to RM36 billion into various asset classes this year. This could potentially lead to RM12 billion to RM16 billion being allocated for Malaysian government securities and equivalents, and RM10 billion to RM15 billion flowing into domestic equities. There could also be around RM2 billion available for infrastructure and real estate investments, which the EPF typically seeks for a steady income stream and as a hedge against inflation.

The EPF has been encouraging new membership through government incentives and initiatives such as i-Saraan, which targets workers in the informal sector and Malaysians under 60 without formal income streams. The government has allocated nearly RM1 billion to deposit RM500 each into the Account 1 of some two million EPF members aged between 40 and 54 with a balance of less than RM10,000. The i-Saraan initiative has seen a 67% increase in registrations from the previous year, with 62,952 new registrations in the first quarter of 2023 alone. This has resulted in an inflow of about RM145 million from these new members. The EPF is also actively seeking to register new members from the informal sector, with the potential for an additional inflow of RM1 billion if a million more members from this sector are signed up.

Source: The Edge