THE i-Sinar and i-Lestari withdrawals may not significantly impact on the Employees Provident Fund’s (EPF) dividend payout for 2020, said a fund manager and an analyst.

It is possible that the retirement fund could declare a lower dividend than previous years but the difference won’t be much, they said.

EPF is expected to declare the dividend for 2020 by the end of the week or early next month.

The payout in 2019 amounted to RM45.8billion, with a 5.45% dividend for conventional savings and 5% for shariah savings.

The 5.45% was the lowest in a decade while the 5% dividend for shariah savings was the lowest since its inception in January 2017.

Head of Research at MIDF Amanah Investment Bank Bhd Imran Yusof said the various relief measures to combat the fallout from the Covid-19 pandemic may not significantly impact on the dividend for 2020 due to EPF’s good performance, cash-flow management and inflow of funds.

Imran said at the very least, the dividend will match Permodalan Nasional Bhd’s (PNB) dividend for Amanah Saham Bumiputera (ASB). PNB declared a 4.25% dividend for its benchmark ASB for 2020.

This is possible because EPF has delivered a commendable performance despite a challenging year due to the Covid-19 pandemic, he said.

“We note that EPF’s net investment income for 9M2020 is only 0.5% lower than the full year 2019 net investment income and it is quite impossible for EPF to not register any income in Q4 2020,” Imran told The Malaysian Insight.

“The performance could potentially be better, barring any impairment.

“Nevertheless, this might be moderated by the fact that last year also saw higher than normal outflow of funds due to the government’s relief measures, such as i-Lestari.”

Prior to the pandemic, the fund was expected to receive an estimated RM1.7 billion in net inflow every month.

“Although the amount may be lower due to the impact of Covid-19, we believe it will be able cover the outflow without significantly affecting dividends.”

Areca Capital Sdn Bhd CEO Danny Wong expects the dividend to be lower than last year, but not significantly lower.

He said the impact of the withdrawals will not be significant due to the fund’s strategic allocation of its liquid assets.

“I don’t expect withdrawals will affect the returns much as EPF manages the fund in accordance with strategic asset allocation where there are provisions for liquid assets for withdrawal,” he said.

Former prime minister and finance minister Najib Razak said recently he expects the fund’s annual dividend for 2020 to be higher than PNB’s 4.25%.

Najib said this is possible due to the returns from the fund’s overseas investments which yielded better returns than the domestic market.

In the first nine months of 2020, EPF’s investment assets stood at RM941.77 billion.

As at January 4, EPF had approved a total 2.5 million applications for the i-Sinar scheme, with withdrawals amounting to RM19.62 billion.

The i-Sinar scheme allows members to withdraw up to RM10,000 from their Account 1 savings.

The eligible include workers in the formal sector, the self-employed and gig workers, those who have not contributed to the EPF for a period of time, have lost their jobs, housewives, or subjected to unpaid leave.

Another RM14.41 billion was approved for withdrawals for the i-Lestari scheme between April 12 and December 18 last year, involving 4.88 million members.

The i-Lestari withdrawal facility allows members aged 55 and below to withdraw between RM50 and RM500 a month from their Account 2 for 12 months until March 31, 2021.

For the full year of 2019, EPF recorded a gross investment income of RM50.29 billion while its total asset stood at RM924.75billion. – February 23, 2021.