As everybody known, EPF manages its funds with one risk profile and that is extremely conservative. Taking out your money from the EPF to invest makes sense because you can choose a fund that suits your risk profile or investing style.
EPF Investment Scheme allows contributors to withdraw money in Account I for investment purpose. The minimum of savings that can be invested is RM1000 and the maximum amount cannot be more than 20% of the total savings in Account I. However, there’re basic savings rules that you need to follow. Withdrawals can only be done every 3 months which allow you to do dollar cost averaging.
Have you ever wonder where do Employees Provident Fund (EPF) invest our hard earn money? We knew our finance ministry would not be able to give guarantee returns in the EPF rates or the money received from the stock market. But, we should know how our government utilize our money in seeking the returns.
Now, it’s possible to gather the information since EPF publish its Top 30 Equity Investments in companies listed on their website. The table below shows the list of Top 30 equity investments listed on Bursa Malaysia by EPF Malaysia as at 31st March 2011.
Recently, EPF declares the dividend payout of 5.8% for the year 2010. Compare to year 2009(5.65%), it is an increase of 0.15% in dividend payout. Thus, the returns for the year 2010 is in fact slightly better than 2009. The increase still acceptable as year 2010 economy was strong in the first and second quarter and economy crisis turn down a bit start from the mid of the year.
I believe that most of the account holder will feel very happy with 5.8% EPF dividend payout for the year of 2010, as it is higher than parking your money in fixed deposit. But, do you know what’s the average dividend rate of EPF is over the period of year before retirement? It is better you do the math to calculate your future EPF funding projection so that it will be easy for you to decide how you can utilize your EPF account smartly.
Do You Feel Satisfied with EPF Dividend Rate for 2010?
Before that, our government allow employee to reduce their EPF contribution from 11% to 8%. However, start from this month, the EPF employee contribution rate will back to normal which is 11% while their employer’s contribution rate still remains at 12% of your monthly wages. Thus, you can now enjoy total of 23% EPF contribution of your monthly wages.
Our government can make such decision due to the recovery from bad economy which you can see from different sector such as banking, employment and production.
I will strongly agree with the move as you can have huge benefits from the big picture. The reduction of EPF contribution rate will increase the employee’s disposable income and this will increase their spending as well. In the other words, they are spending their future money instead. Subsequently, they will less money for retirement. Not only that, you will also need to pay more income tax as you have higher income.
Why Our Government Increase the Rate from 8% to 11%?
Singapore’s CPF (Central Providend Fund), is different from Malaysia’s EPF. It provides many working Singaporeans with more sense of security in their retirement. Do you know why?
Under this CPF Contribution Scheme, you will be deducted 20% of your total wages to CPF monthly contribution.
Let’s take an example, if you are Singapore permanent resident with total wages $3,000, then the calculation will be: