EPF Dividend for 2012, Big or Small "Ang Pow"?

Apart from looking forward to the Chinese New Year festivities, the month of February is also a month where we anticipate the announcement of 2012 EPF Dividend!

For the record, the 2010 EPF dividend distribution was declared on 21st of Feb 2011 while 2011 dividend distribution was declared on 19th of Feb 2012. Therefore, it is highly likely that 2012 EPF dividend distribution announcement should also fall between those dates.

For income earners, people who we say "makan gaji", they tend to place some importance in knowing the EPF dividend payout. The higher the dividend declaration, the more money for retirement!

Now, to give a speculated projected prediction, we first take a look at EPF's performance for 2010, 2011 and 2012:

EPF’s GROSS INVESTMENT INCOME
	2010 (RM, billion)	2011 (RM, billion)	2012 (RM, billion)
Quarter 1	5.55	6.53	7.74
Quarter 2	5.93	6.75	7.66
Quarter 3	5.75	6.80	7.02
Quarter 4	6.83	7.16	?
Total	24.06	27.24	?

Predicting Quarter 4 and Total performance of EPF for 2012

Based on the previous table, we can establish a relative percentage income growth between 2010 with 2011 and 2011 with 2012 as shown below:

	2010 (RM, billion)	2011 (RM, billion)	% increase 2010 to 2011	2012 (RM, billion)	% increase 2011 to 2012
Quarter 1	5.55	6.53	+17.66%	7.74	+18.53%
Quarter 2	5.93	6.75	+13.83%	7.66	+13.48%
Quarter 3	5.75	6.80	+18.26%	7.02	+3.24%
Quarter 4	6.83	7.16	+4.83%	?	?
Total	24.06	27.24	13.21%	?	?

Key Observation

1. For Quarter 1 and Quarter 2, the % increase of income have been consistent for the past 2 years. 
2. For Quarter 3, the income growth between 2010-2011 is 18.26%, yet between 2011-2012 the growth is only 3.24%. The difficulty in bringing consistent high returns was mentioned by Tan Sri Azlan Zainol, CEO of EPF during the 2012 Quarter 3 announcement. 

Quote: "Given the continuing uncertainty in the economy and the low interest rate environment, it will be tough to sustain current investment performance in the quarters to come. Nonetheless, the EPF continues to maintain a robust risk management framework with tactical investment strategies in place to ensure that it does not only preserve, but also enhance the value of members' retirement funds," 

It is expected that the performance of Quarter 4, 2012 would largely be determined by the performance of the Kuala Lumpur Stock Exchange (KLSE). 

Thanks to this SITE, I was able to obtain obtain the performance of our Kuala Lumpur Stock Exchange Index for Quarter 3 (2012) and Quarter 4 (2012):

Chart for Quater 3

For Quarter 3 (2012), the KLSE Index gained 2.12%

Chart for Quarter 4

For Quarter 4 (2012), the KLSE Index gained 2.20% 

Quarter to Quarter Gain from KLSE Index:

= (Quarter 4 Gain - Quarter 3 Gain) / Quarter 3 Gain x 100%

= (2.20% - 2.12%) / 2.12% x 100% 

= +3.77%

Next is to use the 3.77% Quarter to Quarter gain from KLSE Index to project Quarter 4 EPF income earnings. 

Projected Quarter 4 EPF Income:

= EPF's Quarter 3 Earnings x (100% + 3.77%)

= RM 7.02 billion x 1.0377

= RM 7.28 billion

Total EPF's income earnings:

= Q1 + Q2 + Q3 + Q4

= RM 29.7 billion

The updated table based on the projected calculation for Q4 and Total EPF Earnings as shown below:

	2010 (RM, billion)	2011 (RM, billion)	% increase 2010 to 2011	2012 (RM, billion)	% increase 2011 to 2012
Quarter 1	5.55	6.53	+17.66%	7.74	+18.53%
Quarter 2	5.93	6.75	+13.83%	7.66	+13.48%
Quarter 3	5.75	6.80	+18.26%	7.02	+3.24%
Quarter 4	6.83	7.16	+4.83%	7.28*	+1.68%*
Total	24.06	27.24	+13.21%	29.70*	+9.03%*

*projected figures and percentages

How much Dividend will EPF announce for 2012?

This is another table that shows the correlation between past EPF income earnings with dividend payout:

	EPF Gross Investment Income (RM, billion)	Dividend Payout
2009	19.63	5.65 %
2010	24.07	5.80 %
2011	27.24	6.00 %
2012	29.70*	X

*projected figures and percentages

Key Observations

1. Between 2009 to 2010, EPF's Gross Investment Income added RM4.44 billion and dividend payout was increased by +0.15%. That's 0.034% dividend increase for every 1 billion added.
2. Between 2010 to 2011, EPF's Gross Investment Income added RM3.17 billion and dividend payout was increased by +0.20%. That's 0.063% dividend increase for every 1 billion added
3. It is projected that between 2011 to 2012, EPF's Gross Investment Income will add RM2.46 billion.

I know there are a many other factors that need to be considered to make an accurate prediction,  but I'll leave that to the experts. 

To make things simple, I intend to take the average for "dividend increase/billion gained" as stated in Item 1 and 2 and use that value to project the dividend for 2012. Here's the calculation:

Average Dividend Increase per billion gained :

= (0.034% per billion gained + 0.063% per billion gained) / 2

= 0.0485 % per billion gained

Projected EPF Dividend increase for 2012 :

= (0.0485 % per billion gained) x (RM2.46 billion gained for 2012)

= 0.12%

Projected EPF Dividend for 2012:

= (2011 Dividend) + (Projected EPF Dividend increase for 2012)

= 6.00% + 0.12%

= 6.12%

Summary

I know that there are many assumptions in my prediction and I am expecting this post to get quite a bit of bashing from experienced readers. Well what's most important after writing this post is that I got to know EPF just a little bit better. 

If EPF is able to return a dividend close to what I've calculated, that's small ang pow for me. Anything more, then it's considered a big ang pow. Fingers crossed!

Cheers and Happy Investing!

Give me an ang pow for writing this post by :

1. Sharing it on your Facebook!

2. Like my Facebook Page

3. Subscribing to me. See the "FOLLOW MY ARTICLES VIA EMAIL" section located at the top left? Just key in your email and click Submit.

4. Visit my blog for other articles at http://invest-made-easy.blogspot.com/