KUALA LUMPUR, Feb 17 (Bernama) -- The Employees Provident Fund (EPF) has declared a dividend of 6.15 per cent for the financial year ending Dec 31, 2012, the strongest results in early millennium.
Its chairman, Tan Sri Samsudin Osman said the rate was 15 basis point higher than six per cent paid in 2011.
"It is also a new record for RM27.45 billion will be disbursed to EPF members, up 12.20 per cent from RM24.47 billion distributed the previous year.
"EPF also recorded the highest gross investment income of RM31.02 billion in 2012, an increase of 13.91 percent compared to 2011," he said in a statement.
He said despite increasingly complex investment environment, the EPF maintained a steady upward momentum to record the strongest results since the early millennium, supported by effectiveness of long-term investment strategy, and disciplined and prudent approaches.
In addition, he said in line with the Strategic Asset Allocation practised by the EPF, most of its asset investments continued to be confined to low-risk fixed-income and stable instruments.
He said equity investment made up 38.77 per cent of the total asset investment in 2012 while the remaining 3.59 per cent and 2.42 per cent respectively were in money market instruments, and real estate and infrastructure.
"While we invested in various investments, they were largely in low-risk fixed-income instruments for which the rate of return on annual investment (ROI) exceeded six per cent for three consecutive years.
"Equity generated double-digit ROI of 10.06 per cent, while return from fixed-income instruments exceeded 5.50 per cent, despite current low interest rates," he said.
At the same time, he said several one-off transactions in the capital market undertaken in 2012 bear fruit for income from loans and bonds recorded the highest increase compared to 2011.
Samsudin said investment in the asset class contributed RM9.68 billion to gross investment revenue, up 33.62 per cent or RM2.44 billion compared to 2011.
In line with low interest rates, he said the EPF was gradually reducing its exposure to conventional fixed-income assets and turning mature assets to produce higher returns such as equities and property within the limit of acceptable risks.
Backed by steady growth in both domestic and global equity markets in 2012, equity accounted for RM13.91 billion in revenue or 44.84 per cent of gross investment income.
The statement said investment in government securities and bond equivalents generated RM6.26 billion, property and infrastructure (RM595.63 million), and money market instruments (RM574.91).
Samsudin said EPF investment assets as at 31 Dec, 2012 amounted to RM526.75 billion, surpassing half a trillion ringgit and increased 12.31 per cent from RM469.04 billion recorded the previous year.
He said the increase largely came from net contributions from employee subscriptions and employer contributions as well as consistent investment performance in all asset classes.
With the increase in its membership, he said the EPF needed RM4.46 billion to pay every single per cent dividend rate for 2012, an increase of 9.34 per cent from RM4.08 billion paid for every one per cent dividend rate in 2011.
The amount required to pay one percent dividend rate will increase between eight and nine per cent per annum, he added.
The statement said two of major transactions made by the EPF in property investment in 2012 were the Battersea Power Station in London and the purchase of 932 ha of land from the Rubber Research Institute in Sungai Buloh costing RM2.28 billion for the development of a new urban area.
In line with diversification strategy to optimise returns for subscribers, he said the EPF exposure abroad as at Dec 31, 2012 was 15.7 per cent of total asset investment.
In 2012, an additional USD7.1 billion (USD1=RM3.09) investment was made in equity, bonds and real estate globally, he added.