While members can be elated with Employees Provident Fund’s 2021divident announcement of 6.10 percent (a feat under the circumstances) the pension fund had experienced a huge impact on its contribution for the first time in 20 years.
With the dividend announcement, EPF will make a total payout of RM56.72 billion for conventional savings and 6.26 billion for Simpanan Shariah. Both surpass 2019 levels.
But the concern for many members and future contributors alike is the RM101 billion pandemic-related withdrawals that took place, these unorthodox withdrawals which were necessary due to the circumstances resulted in 48 percent of members having less than RM10,000 in their accounts.
In hope over the latest dividend, Chief executive officer, Datuk Seri Amir Hamzah Azizan said “We hope that this dividend and our continued performance will help us begin the process of rebuilding our members’ retirement savings, as economic recovery takes shape over the course of the year,”
According to him, the primary concern with the withdrawals was the impact on members’ retirement adequacy.
“For 2021, the EPF recorded its first-ever negative net contribution (contributions after withdrawals) in 20 years of RM58.2 billion but remained steadfast and prudent in its long term investment strategies while adapting to the challenges to ensure long-term sustainable returns.
However, he said, despite the challenge of managing liquidity in the face of these outflows, the EPF had the capability and agility to respond with minimal impact to the financial market.
As of the end of 2021, the pension fund recorded an increase of 6.0 percent in total gross investment income to RM67.06 billion from RM63.45 billion in 2020, driven by the progressive recovery of the equity markets and most asset classes amid the global recovery. RM63.45 billion in 2020, driven by the progressive recovery of the equity markets and most asset classes amid the global rebound.
Although the retirement nation’s safety net continues to support members’ needs the time comes, If continued calls are made to drain the accounts for self-gratification and of no sense if its impact, the Employment Provident Fund’s primary function as a retirement account will cease to exist.
We might as well call it a savings account!