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Changes in Malaysian EPF Contribution Rates: Effective January 2021

Periodically, countries will change the rate or calculation for social security or pension contributions.  If you have employees in Malaysia, you will want to be aware of upcoming reductions in contributions to the Employee Provident Fund.

What is the Employee Provident Fund (EPF)?

The EPF is a retirement fund for employees in Malaysia, that requires both employee and employer contributions based on a percentage of monthly salary.

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What are the EPF changes for January 2021?

There are several changes affecting both Malaysian employees and employers.  The new rates are:

Employees below 60 years of age:

  • Employee Share: 9% (this is a reduction from 11% previously)
  • Employer Share: 13% (12% for monthly salary over RM5000)

Employees above 60 years of age:

Malaysians:

  • Employee Share: 0%
  • Employer Share: 4%

Permanent Residents/Non-Malaysian:

  • Employee Share: 5.5%
  • Employer Share: 6.5% (6% for monthly salary over RM5000)

Note: The employer share for non-Malaysians who registered to the EPF after August 1, 1998, is only RM5.00. 

Who is affected by the changes?

All workers in Malaysia are affected, including citizens and expat residents.  Non-resident expats can elect to contribute at the new rate as well.

Client Case: Employee Election of Reduced Contribution

We have a client with employees in Malaysia who we informed about the new EPF contribution rates.  Because the rate was a reduction, the employee had the option to maintain the previous 11% contribution rate (to increase their retirement savings) or to elect the new lower 9% rate.

The employees would have to fill out a form to maintain the old rate, or the new lower rate would automatically be applied.

Do you need more information about Malaysia?

In addition to the contribution rate change, you might have more questions about the Malaysian EPF, such as:

Is there a maximum salary amount for calculating contributions?

If expat workers are covered under their home country retirement program, are they exempt from the EPF?

If an expat worker leaves Malaysia, may they transfer contributed funds to their home country?

If you face questions like this from your employees abroad, you might need guidance from our network of local partners, with expertise in running a foreign payroll, calculating benefits and entitlements, or meeting immigration requirements.  We make international employment simple.

 Need more information about employing in a new country? Learn more about:

 

 

Looking to hire an employee in Malaysia? Get in touch.

 

The information in this article is subject to changes in local legislation.

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