It's bad news for Employees Provident Fund (EPF) contributors - the dividend is expected to be as low as 4.5% for 2008.

And this is what unionists are telling their members to expect, claiming that their source is reliable.

They say it is too low despite the fund doing well for the first nine months of 2008 as announced in its third quarter results last year.

j solomon National Union of Bank Employees (NUBE) secretary-general J Solomon said employees were looking forward to better dividends because the fund claimed that it had prudently invested in long-term securities.

“As a long-term player in the local market, coupled with our ability to leverage on the large size of our funds through diversification, the fund should be able to withstand the economic challenges.

“The fund should share its profits through increased dividends with the workers because the economic slowdown has made thousands unemployed.

“It is a lame excuse to state that the global economic slowdown has reduced the profits of the fund,” Solomon said quoting reliable sources about the 4.5%.

mtuc Malaysian Trade Union Congress (MTUC) executive council member A Sivananthan who was reliably informed that the dividend would be 4.5%, said EPF should change its investment advisers because the dividends were always half that of Permodalan Nasional Berhad’s (PNB) dividends.

“I cannot understand why EPF‘s dividends have always been so much lesser than PNB’s.

“It's time the government give preferential shares or pink forms to EPF so that Malaysians could benefit. In fact, there are more bumiputera contributors in EPF than in PNB,” he added.

Complaints from pensioners

Meanwhile, stock market analysts forecast that the dividend for 2008 will be lower and range between 4.5% and 5%.

The dividends which will benefit about 10 million EPF contributors has still not been announced. Last year, Second Finance Minister Nor Mohamed Yakcop, announced dividend rate of 5.8% on Jan 22.

Pensioners have complained of the delay by writing to the media. They urged the government to announce the dividends soon as they depend on it for an income.

Following the announcement of the dividends last year, EPF chairperson Samsudin Osman said, “The buoyant stock market in 2007 was consequential to the higher dividend declared for the year, as was the efficient and effective management of the EPF funds.”

The rate declared for 2007 marks the fifth consecutive year that the EPF has increased its dividend rate. In 2006, the dividend was 5.15%.

However, this year’s dividend according to stock market analysts would be reduced by about one percent.

In December last year, EPF chief executive officer Azlan Zainol said the outlook in the fourth quarter (2008) was likely to reflect the full-scale impact of the global meltdown.

In December, EPF reported an unaudited investment income of RM2.06 billion during the third quarter of 2008.

This positive income was predominantly driven by Malaysian Government Securities (MGS) and Loans and Bonds, both of which posted higher returns compared to the second quarter (2008).

Now, stock market analysts are stating the weak stocks and global performance of EPF investments in the fourth quarter of 2008 is likely to reduce its dividend rate.

In 2008, equities were the biggest contributor of the EPF’s earnings at RM6.04 billion, up 81 percent from RM3.33 billion in the previous year.

Nevertheless, EPF has continued to invest most of its funds in more secure fixed income instruments, in line with its prudent strategy to ensure members’ savings are well protected in the longer period.