The Employees Provident Fund (EPF) has removed restrictions that had prevented members from making investments overseas.
According to a report by The Star Online, the latest move by EPF now allows its members to invest in unit trust funds fully invested overseas, a change from its previous restriction to unit trust funds with no more than 30% foreign exposure.
Members can now opt to invest in unit trust funds that are 100% invested overseas as long as EPF recognises these funds.
Members can invest using their savings in Account 1.
The EPF currently manages about RM680 billion of investment assets for 14.5 million members, of whom 6.7 million are active members.
It declared a dividend rate of 6.4 per cent for 2015 and 6.75 per cent for 2014.
Come January next year, the EPF will offer a fully syariah-compliant investment scheme, called Simpanan Syariah.
The EPF expects between 1.5 million and two million of its members to convert their savings to Simpanan Syariah during the first year of its launch.
In May, EPF chief executive officer Shahril Ridza Ridzuan was quoted as saying the fund has generally paid out higher dividends to its contributors compared with unit trusts.
“Only one out of five contributors who have withdrawn their money from the Employees Provident Fund to invest in unit trusts have enjoyed better returns than what the retirement fund would have given them.
“Contributors who opt to invest outside of EPF should have financial literacy,” Shahril was reported to have said.
He had also speculated that the dividend for 2016 is likely to be lower than this year’s 6.4 per cent.
“Equity returns this year will not be at the same level as last year. So, if you look at the contribution of equities, which provided 60 per cent of our income last year, it is now already down to 40 per cent.
“If this continues, our total gross income for 2016 will be less than 2015 and the dividend declared will be lower as well,” Shahril said.
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