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Understanding employees provident fund (EPF) in Malaysia.

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Understanding employees provident fund (EPF) in Malaysia

The Employee Provident Fund (EPF) is a mandatory requirement for Malaysian citizens and voluntary for non-citizens, and both employers and employees must contribute monthly. We have put together a fundamental guide on understanding the employee provident fund in Malaysia.

Let’s start.

What is the employee provident fund in Malaysia?

The EPF is a retirement planning scheme for employees in Malaysia. Both the employer and employee must make contributions to the fund every month.

Employers need to register with the EPF within seven days from the date an employee is employed.

Payments subject to employee provident fund contribution

In addition to an employee’s salary, there are also other payments that are subject to the EPF contribution.

These payments are:

  • Allowances
  • Bonuses
  • Commission
  • Incentives
  • Payment in arrears
  • Payments for unused annual or sick leave
  • Wages for half day leave
  • Wages for maternity leave
  • Wages for study leave

Payments that are not subject to EPF contribution include:

  • Service charge
  • Overtime payment
  • Gratuity
  • Retirement benefit
  • Termination benefits
  • Retrenchment
  • Travelling allowance
  • Any other remuneration or payment exempted by the minister

Employee provident fund contribution rates

The EPF contribution rates in Malaysia are as follows:

Monthly salaryRM 5,000 and belowMore than RM 5,000
Employee’s statusEmployer’s contribution rateEmployee’s contribution rateEmployer’s contribution rateEmployee’s contribution rate
Residents ages below 60 13%9%12%9%
Residents aged 60 and above4%0%4%0%
Permanent residents ages below 6013%9%12%9%
Permanent residents ages 60 and above6.5%5.5%6%5.5%
Non-residents ages below 60 (registered as a member before 1 August 1998)13%9%12%9%
Non-residents aged 60 and above (registered as a member before 1 August 1998)6.5%5.5%6%5.5%
Non-residents ages below 60 (registered as a member on or after 1 August 1998)RM 5.009%RM 5.009%
Non-residents aged 60 and above (registered as a member on or after 1 August 1998)RM 5.005.5%RM 5.005.5%

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Compliance Calendar

 

How to calculate the employee provident fund contribution?

Employers must calculate the EPF contribution amount based on the contribution rate in the Third Schedule of the EPF Act 1991, instead of the exact contribution rate percentage except for wages that exceed RM 20,000.

The Third Schedule consists of five parts which specify the monthly contribution rate for each type of employee status:

  • Part A applies to the following employees under the age of 60:
    • Employees who are Malaysian citizens.
    • Employees who are not Malaysian citizens but are permanent residents in Malaysia.
    • Employees who are not Malaysian citizens but have been EPF members before 1 August 1998.
  • Part B applies to employees under the age of 60 who are not Malaysian citizens and have been EPF members on or after 1 August 1998.
  • Part C applies to the following employees who are 60 and above:
    • Employees who are not Malaysian citizens but are permanent residents in Malaysia.
    • Employees who are not Malaysian citizens but have been an EPF member before 1 August 1998.
  • Part D applies to employees who are 60 and above who are not Malaysian employees and have been EPF members on or after 1 August 1998.
  • Part E applies to employees who are Malaysian citizens who are 60 and above.

Example of the employee provident fund contribution calculation

An employee who is a Malaysian citizen under the age of 60 has a monthly wage of RM 15,150, and the employer must contribute 12% (RM 1,824), and the employee must contribute 9% (RM 1,368) according to the Third Schedule’s monthly contribution rate.

When is the employee provident fund contribution paid?

The EPF contribution should be paid by the 15th of the following month.

If the EPF contribution is not paid within the deadline, a late payment charge will be imposed.

How to submit employee provident fund contributions?

There are various ways employers can submit the EPF contribution, which include:

  • i-Akaun
  • e-Caruman application
  • Internet banking
  • Bank agents of Bank Simpanan Nasional, Maybank, Public Bank and RHB Bank
  • EPF counters nationwide

How to register for an employee provident fund account?

There are four main ways you can register to be an EPF member. The first method is automatically being registered as a member once the EPF receives the first contribution from your employer.

The second method is registering at an EPF counter by using your MyKad. If the registration is unsuccessful or you are not a Malaysian citizen, you are required to complete Form KWSP 3. Once the registration is successful, you will receive the EPF member number.

The third way is by having your employer register you as an EPF member through i-Akaun (Employer). The EPF member number will be issued upon successful registration.

The last method is at an EPF Smart Kiosk by using your MyKad and verifying with your thumbprint. You will receive the EPF member number once the registration is successful.

How to activate i-Akaun (Member)?

EPF members can monitor their EPF balance, print EPF statements and easily apply for withdrawals through the i-Akaun (Member).

Upon registration, members will receive a temporary user ID and passport via SMS that can be used to activate their i-Akaun. It must be made through the i-Akaun website within 30 days.

To activate the i-Akaun (Member), you must complete the following steps:

  1. Go to the i-Akaun website.
  2. Click login under I’m a member (i-Akaun).


  1. Enter the temporary user ID and click next.
  2. Enter the password and click login.

  1. Once you have gone through the terms and conditions, check the tick box and click next.
  2. This will take you to the First Time Login page. Create a new user ID and a new password and click next.
  3. A successful i-Akaun (Member) new login creation message will be displayed, and you can continue with your new login information.

Penalties for failing to comply with the Employee Provident Fund Act

It is the employer’s responsibility to ensure that they comply with the EPF Act 1991 and contribute to the fund every month. Failure to comply will result in penalties, as shown below.

OffencePenalty
An employer fails to register with the EPF within seven days of hiring an employee (section 41(1)).Imprisonment of not exceeding three years or a fine of not more than RM 10,000 or both
Failure to pay the EPF contribution on or before the 15th of the following month (section 43(2)).
Deducts the employee’s contribution share from the salary and fails to pay the EPF contribution (section 48(3)).Imprisonment of not exceeding six years or a fine of not more than RM 20,000 or both
Deducts the employer’s contribution share from the employee’s wage (section 41(1) and 47(2)).
Failure to notify the EPF within 30 days from the date he ceased to have any employees (section 41(3)).Imprisonment not exceeding six months or a fine not exceeding RM 2,000 or both.
Failure to furnish the statement of wages to his employees (section 42(1)).

EPF in Malaysia is a saving and retirement plan for both Malaysian and non-Malaysian citizens which they must contribute to by the 15th of each month at specific rates. If you have any further questions, do not hesitate to contact Acclime.

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