EPF Dividend 2024: Highest since 2017 at 6.3%.

If you have been contributing to your EPF, then its dividend payout is one of those moments that you would wait for every year!

EPF announced that it will reward us with 6.3% of EPF dividend for 2024, the highest it has offered in the last five years.

Does this mean that EPF Malaysia is one of the best places for us to invest into? Can we now forecast that every year from here on will be this rewarding?

In this article, we will break down what this means, how EPF dividends work and why you should consider it as part of your financial planning.

What is a Dividend?

According to Xero, a dividend is the portion of a company’s profit that is paid out to its shareholders.

If you invest RM10,000 in a fund and they declare a 3% dividend at the end of the year, you would make RM300.

With EPF dividends, your retirement savings grows each year through these dividend rates.

Why putting funds in your EPF can help you grow financially.

Although EPF might look like forced savings, we can’t deny how it is one of the most important tools for Malaysians to grow their money, while still being relatively low risk. Let’s look at some of the benefits of putting money into your EPF account.

Guaranteed Long-Term Savings

Forced monthly deductions from your salary can be slightly painful but this coupled with restriction on early withdrawals creates a much stricter regime of saving habits.

Although it is mostly for retirement, they can also function for big financial decisions like buying your first home or even furthering your education.

Compound Growth Through Dividends

According to Wells Fargo, compounding interest refers to the “process of earning potential returns not only on your initial investment but also on any accumulated returns—which can help grow your investment over time.”

With the EPF dividend interest rate in 2024 set at 6.30%, your savings can grow exponentially thanks to compounding effects.

Capital Protection, Steady Returns

For many of us, money might be tight, and saving amidst all of this means looking for a tool that is safe and lower risk. EPF Malaysia is a good tool since it is government-backed and a lot less volatile than stock investments for example.

Tax Relief

Chances are you are also contributing to income tax in Malaysia. By contributing to EPF in Malaysia, you can claim up to RM4,000 in relief, reducing your income tax burden.

Housing, Education and Medical Withdrawals

Although it might feel like you can never touch your EPF money, partial withdrawals are available for certain expenses like buying a home, funding your education or even covering your medical bills.

Peaceful Retirement

All in all, EPF exists so that you can peacefully retire without having to depend on others or worry about making an income.

How to Budget Your Salary While Saving with EPF:

With a 6.30% EPF dividend interest rate in 2024, many are looking to grow their EPF contributions. Let’s look at a few smart ways to budget your salary while saving with EPF:

Understand Your EPF Contribution

As you are already aware, our contributions are automatically deducted every month. While we contribute a standard of 11%, most employers also contribute a standard of 13% every month into EPF in Malaysia.

That’s a whopping 24% saved into your retirement fund.

Calculate Your Take-Home Pay

With the 11% deductions applied to your take home pay, you do get less to spend every month. So, be aware of what your actual income is. To calculate this :

Assume RM6,000 income per month – 11% EPF contribution (RM 660) = RM5,340

Technically, you only have RM5,340 to use for the month, not including other possible deductions from salary.

Follow the 50/30/20 Rule

It’s not rocket science to budget your salary. An easy rule to follow is the 50/30/20 rule, where 50% is allocated for needs like your home rental, utilities, transportation; 30% for wants like sports and vacations or other leisurely activities and another 20% for savings whereby almost 10% is contributed to EPF and another 10% is kept aside for emergency fund or other types of investment.

Treat EPF as Retirement Savings, Not Emergency Cash

Although we might feel secure thanks to EPF savings, it’s important to remember that it is not to be used as a backup or emergency fund.

While partial withdrawals are allowed, using your EPF for short-term needs can be detrimental to growing your savings in the long term. Don’t forget that EPF’s growth is reliant on its compounding nature, so withdrawing money from it can reduce potential gains.

That said, the wise thing to do is to build a separate emergency fund, one that comprises at least 3-6 months of your salary.

Top Up Voluntarily If You Can

The beauty of EPF is that you can actually still contribute voluntarily. If you have extra income, then you can make a voluntary contribution to EPF.

You will still enjoy the same dividend rate and all the protection that is offered on your capital including tax relief benefits. That’s a win-win!

Keeping in mind that the EPF dividend forecast for 2025 might be around 6%, saving even a few hundred ringgit a month can add up significantly over the years.

Track Your Spending Monthly

There’s a famous saying that says, ‘If you fail to plan, you plan to fail.’ In this case, not tracking your plan is definitely a recipe for failure!

Use simple tracking apps to consistently monitor your expenses so that you can adjust your spending habits accordingly. Especially if you are keen to start saving voluntarily with EPF, you should track your expenses so that money leaks can be stopped and saved instead!

EPF Dividend 2024: A Strong Signal of Economic Recovery

Recovery from the Pandemic

EPF’s 6.30% dividend marks its highest payout since 2017. For many, this was a clear sign of bounce back from the pandemic dip, which fell as low as ~5.20% dividend rate.

It was a clear sign that the Malaysian economy had strengthened post pandemic and that investors like you and I were benefitting from the uptick in EPF dividend rate.

Boost from Strong GDP Growth

Our GDP also grew 5.1% in 2024 from merely 3.6% in 2023 indicating that businesses are doing much better, more people are working and therefore spending.

The IMF states that GDP is the monetary value of final goods and services—that is, those that are bought by the final user—produced in a country in a given period of time.

When GDP increases in any country, it is also a sign that investments perform better, which is a clear driver when we look at EPF’s dividend in 2024.

EPF Made Smart, Balanced Investments

EPF currently manages almost RM1.25 trillion in assets. In order for them to reward investors with a 6.30% EPF dividend interest rate in 2024, they must have made some smart moves to earn strong returns from their stocks, bonds and real estate investments.

More People Trust EPF with Their Money

More Malaysians are also beginning to look at EPF as a safe haven of compounding interest, reflected in a 32% surge in voluntary contributions in 2024.

With that, EPF too paid out a record RM73.24 billion in 2024 – an 11% increase from the year before.

EPF Dividend 2025: Forecast & What It Means

Can EPF maintain or even increase its pay out in 2025? Let’s look at what are discussed when it comes to the EPF dividend 2025 forecast:

Analyst Forecasts

Most experts predict the EPF dividend for 2025 will be between 5.8% and 6.2%. While the numbers predicted are slightly lower than 2024, these predictions are still high based on history.

Dividends are usually credited in March, so you can check your KWSP account around that time.

Why It Might Be Slightly Lower

Although Malaysia has been steadily growing, global uncertainty may directly impact the returns for EPF as a giant investor themselves.

EPF is also exercising caution while investing as it needs to protect capital during these uncertain times. All these could contribute to the reduction of EPF dividend in 2025.

What Could Keep It Strong

While the sentiment could be showing a reduction, there’s still reason to be hopeful. Malaysia as a whole is still achieving economic growth that is sure to boost local investments.

EPF’s diversified portfolio is also able to balance out each other so it may not be as badly hit. Plus, the reduction from EPF dividend in 2024 is still expected to be higher than many other safe, low-risk investments like fixed deposits.

What It Means for You

No matter what the debate may be with the EPF dividend 2025 forecast, there is no doubt that EPF remains to be one of the safest ways to grow your money.

The fluctuation happening between this year and last year is definitely normal and expected with any type of investment.

How to Calculate EPF Dividend

EPF dividends are calculated monthly and compounded annually based on monthly balance.

Basic Formula:

• Monthly Dividend = (Month-End Balance x Dividend Rate) ÷ 12

  Then, add up all 12 months to get your total annual dividend.

[su_box title=”Example:” box_color=”#77001d” title_color=”#ffffff” radius=”10″]Example: Assuming your monthly end balance is RM6,000 every month: RM6,000 x 6.30% = RM378 annually RM 378 / 12 = RM RM 31.50 per month[/su_box]

*Notes:

• New contributions only start earning dividends from the month after they’re added.
• Withdrawals will stop earning dividends from the withdrawal month.
• Final dividend is credited once a year, usually in February or March.

Conclusion

Financial planning is extremely crucial for us everyday Malaysians. The EPF dividend in 2024 that gave 6.30% is one of the many reasons why EPF Malaysia is still one of the highly desired tools in growing your investments.

With all this knowledge in hand, it’s not difficult to make EPF work for you instead. As long as you have planned your finances strategically, you can definitely aim to grow your investments according to your financial goals.