KUCHING: The higher Employees’ Provident Fund (EPF) dividends signal robust investment returns, a healthy investment climate, and overall economic strength, which are pivotal for fostering investor confidence.
Economist Dr Jerome Kueh said this will in turn bolster confidence among both domestic and foreign investors in the country’s financial stability.
“The stability in the financial and economic markets are critical to enhance confidence among investors.
“The market sentiment depends on the economic and financial circumstances, subsequently on the economic recovery from the Covid-19.
“Both domestic and foreign investors will have confidence towards the financial stability of the country by viewing the higher dividend,” he told New Sarawak Tribune.
On Sunday (Mar 3), EPF announced an increase in dividend rates for both Conventional and Syariah Savings, with the former rising to 5.5 per cent and the latter to 5.4 per cent, resulting in total payout amounting to RM50.3bil and RM7.5bil respectively.
Comparatively, for 2022, EPF declared a dividend rate of 5.35 per cent for conventional savings with a total payout amounting to RM45.44bil, as well as a 4.75 per cent for syariah savings, with a payout amounting to RM5.7bil.
Kueh noted that the higher dividends also have positive implications for personal financial security, notably in retirement planning and investment behaviour.
The higher dividend paid, he said, will lead to higher contribution to the retirement funds. This is significant to build up retirement funds to ensure sufficient level of funds at the time of retirement.
“In other words, this can result in enhanced financial stability in the future, offering members stronger financial assets for retirement.
“The increased dividends could influence the investment decisions of the people. Higher yields on savings could motivate increased contributions or even reduced withdrawals,” he added.
Moreover, Dr Kueh said the higher dividends could indirectly mitigate the dependency on government social welfare programmes for the aging population, thereby easing fiscal burdens.
He explained that this reduction in reliance stems from the change in retirement savings resulting from higher dividends.
Consequently, there would be a diminished need for government assistance in the future, fostering greater financial autonomy among the elderly.
