# EPF Declares 5.65 Percent Dividend for 2009

The Employees Provident Fund (EPF) has declared a dividend rate of 5.65 per cent for the financial year ended Dec 31, 2009. The dividend paid in 2009 is 1.15 percent higher than the amount paid in 2008. In 2008 the dividend rate was 4.5 percent. News on higher dividend for year 2009 was in mainstream media last October. You can have a look at previous year dividendΒ here.

In 2009, EPF make agreat achievement by securing highest ever net income at RM19.63 billion. This is 34.82 percent or RM14.56 billion higher than the amount recorded in 2008.

In line with EPF strategy to preserve contributor’s capital, 72.53 per cent of the total investment were devoted in fixed income instruments while 27.05 per cent was in equities and the balance in property.

As at Dec 31, 2009, EPF’s investment portfolio grew 8.55 per cent or RM29.25 billion to RM371.26 billion from RM342.01 billion in 2008.

29 comments… add one
• The formula to calculate one’s dividend as given by the EPF website is beyond normal comprehensiveness. Do you have any examples to show the calculation properly, especially when one has withdrawn his Account 2 portion to reduce the mortgage loan?

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• I could not find the formula that you mentioned in EPF website. Please you give me the link and take a look at it.

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• OK, this is what is written there,

Dividend Rate = Net income (a) x 1% Total for a 1% dividend (b)

Investment income + Non-investment income – Expenses

Total for a 1% dividend is based on:
Opening balance of contribution (after withdrawal) that obtain dividend for a 12-month period, and
Monthly contribution that obtain pro rated dividend i.e. dividend for the n-month will get (12-n) month dividend. For example, the September contribution (n=9) will obtain a 3 months dividend.

OK I agree with you. Not really sure what is they trying to say there. OK this is what I understand how the dividend is calculated.

Dividend = (sum of min balanced of each month)/12 x dividend declared

I hope it is clear.

Since dividend for 2009 was declared, you can try calculate using the formula above. For my case, it is correct.

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• Nope. The numbers do not tally for me using your formula of

Dividend = (sum of min balanced of each month)/12 x dividend declared

When you mention it is correct for your case, do you mean your calculated value and the number declared in your statement are exactly the same, or with a difference RM1 to RM2 ?

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• It is not exactly the same, around RM7 different. I believe it is very minimal it could be coming from decimal rounding.

In your case, how much is the different?

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• It takes tremendous rounding errors to have a difference of RM7 ! Of maximum you can have 13 rounding errors per year: one from the opening balance dividen calculation & 12 from each of the monthly contribution ones, which translates to an average of RM0.538 rounding errors !!?? How is that possible and what kind of system the EPF has if it is true ??!!

Nope. In such case the formula that you proposed got to be wrong.

My case is of “special treatment” as I have made withdrawal from Account II to prepay my mortgage.

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• How much is the different for your case?

I made similar withdrawal a few years back. However I did not check on the dividend calculation.

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• mine worse than yours. It has a RM24 difference.

Logically speaking any difference of more than RM1 is of unacceptable, which could only means that we are not using the same formula that EPF is using to calculate the dividend.

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• I just found back your blog today after the address changed. Your blog is among the few blogs i visit everyday since half year ago. Very informative blog.

Are the same calculation (pro rated based on min. balance of each month) applied to withdrawal (eg. for unit trust investment)? If it is the case, then withdraw on starting of month is better than early month(eg.2nd,3rd,4th…)withdrawal because we can save 1 month dividend. Pls correct me if I am wrong.

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• Hi steven, I could not inform my readers for address changes because Blogger deleted my earlier blog. Thanks for your interest.

I hope you don’t mind, I edited your comments to merged the 2 comments that you just make.

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• The “pro-rated based on min. balance of each month” way to distribute dividend is what the PNB is practising for ASW2020, ASM, etc … but not for the EPF dividend.

Somehow I believe that EPF is using “daily rest” methond to determine the dividends nowadays.

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• Yes, I think it is likely because of the different figure derived from the calculation.

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• So what’s the correct formula/methodology ? :p

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• When I have time, I try to calculate using daily rest.

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• I google a few hundreds websites and NONE gives me a correct solution. That’s so surpringly weird. It also indicates how “informative” EPF is. π

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• I just make a calculation on daily rest but it still not exactly the same, but closer, only RM5 different.

• Nope. It’s confirmed “daily rest”. I’ve successfully “decode” my previous years statements (from 2006 onwards) and this is what I manage to conclude:

1) There are two types of dividend, namely annual compounded dividend and pro-rated monthly dividend.
1.1) the annual compounded dividend is generated by the opening balance of that year, i.e., the total EPF amount as at 1 Jan of the year.
1.2) the pro-rated monthly dividend is generated by the monthly contributions of that year.

2) Both types of dividend are daily rest, 365 days for normal years and 366 days for leap years.
2.1) the opening balance of the year starts earning dividend from 1 Jan of the year until (but not including) the day a withdrawal (e.g., Account II for mortgage reduction) is transacted.
2.2) irrespective of the actual day a monthly contribution is deposited, the monthly contribution starts earning dividend from (and including) the final day of that particular contribution month (e.g., 31 Jan, 28 Feb, 31 March, etc) until (but not including) the day it is transacted for withdrawal (e.g., Account II for mortgage reduction).

** Taking 1) & 2) together, if one has a back-dated contribution of a particular month in the previous year, this amount has to be included into the opening balance of the current year.
*** If one has withdrawn money from either Account I or Account II, the dividend calculation should be done for each Account seperately, in order to have a clearer picture.

• Marx, I agree with you. I even went to EPF office to check how they calculate the dividend but the officer himself also do not know.We should know the calculation method so that we can decide the timing of withdrawal.

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• Because their ability to count is limited to their 10 fingers and 10 toes. And guess what? They also say: the computer says so … π

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• The calculation methodology that I have detailed above works perfectly for me and my spouse for all years starting from 2006 till the latest 2009 statements. The maximum difference in any particular year dividend is only RM0.01 to RM0.02 .

Please check that with yours and feedback here if it works for you, too. π

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• Btw, upto 2005 it was monthly rest. π

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• Great finding marx!

I haven’t check mine yet. Quite busy for the time being.

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• Check! check! It’s your own money you’re entitled to, which is already of small amount, make sure it is not getting smaller by mistakes of human or machines alike. :p

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• Marx,

You have answered my question for so many years.We can conclude that timing of contribution & withdrawal is not influent the dividend since the calculation is based on daily rest.

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• Steven,

So you have verified your statements with my finding above ?

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• anyone care to point out whether the above calculation method works or did I miss out something else ?

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• I will try it when I have more free times

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