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Employees Provident Fund (EPF)

March 8, 2024

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What Is Employees Provident Fund (EPF)

The Employees Provident Fund (EPF) is a social security organization established in accordance with the laws of Malaysia, specifically the Employees Provident Fund Act 1991 (Act 452). It offers retirement benefits to its members through the efficient and dependable management of its members’ savings. Employers may easily fulfil their legal and ethical commitments to their workforce via the EPF.

A contribution is the sum of money credited to a member’s personal EPF account. The sum using an employee’s monthly pay. Contribution amount follow group of range salary set by EPF. For workers whose earnings or salaries are less than RM5,000, rate of contribution is 11% of their monthly compensation, while the employer’s share is 13%. The individual contribution remains at 11% and the company contribution is 12% for those whose wages/salaries exceed RM5,000.

The contribution rate might vary according to Malaysian politics, more details may refer to https://www.kwsp.gov.my/documents/20126/140690/Jadual+Ketiga+BI.pdf.

Persons Obligated to Contribute Employees Provident Fund (EPF)

Employers are required to make EPF payment on behalf of their staff in regardless staff under a contract of service or apprenticeship, with the exception of the individuals listed in the 1st Schedule of the EPF Act 1991, which includes:

  • Part-time, temporary, and probationary employees.
  • Directors who receive wages from the company.
  • Employees who are continuing working up to the age of 75, regardless of whether they have or have not taken a full or partial retirement after turning 55 or 60.
  • Employees who work for employers other than the federal, state, or any statutory bodies or local authorities and who have taken their savings under the Pensionable Employees and Optional Retirement Withdrawal Act.
  • Employees who previously completed a full withdrawal under the Incapacitation Withdrawal, recovered thereafter and were hired again in any capacity.
  • Minimum Age: Employment age is subject to Children and Young Persons (Employment) Act 1966.
  • Maximum Age: 75 years

 

Salary/Wages Required To Contribute Employees Provident Fund (EPF)

Whether it was agreed to be paid on a monthly, weekly, daily, or other basis. Payments due to an employee under the contract of employment or apprenticeship.

List below payment to employee eligible for EPF contribution:

  • Salary
  • Payment for unutilized annual or medical leave
  • Bonus
  • Allowance
  • Commission
  • Incentive
  • Arrears of wages
  • Wages for maternity leave
  • Wages for study leave
  • Wages for half day leave
  • Other payments under services contract or otherwise

List below payment to employee not subject to EPF contribution:

  • Service charges
  • Overtime payment
  • Gratuity
  • Retirement benefits
  • Retrenchment, temporary and lay-off termination benefits
  • Any travelling allowance or the value of any travelling concession
  • Payment in lieu of notice of termination of employment
  • Director’s fee
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