EPF Contribution Rates Malaysia

Established in 1951, the Employees Provident Fund (EPF) in Malaysia is a government-managed retirement savings scheme aimed at helping private sector employees save for their retirement. Under the scheme, both employers and employees contribute a portion of the employee’s salary to the fund. Contribution rates for EPF are predetermined by Malaysian labour laws.

The EPF provides various services, including retirement savings, withdrawals for housing, education, and medical expenses, and offers investment options for members. The fund is one of the world’s oldest and largest retirement funds, with robust financial management and investment strategies. It ensures financial security for Malaysians in their post-retirement years.

Contributions to the EPF are compulsory for the following as per the Employees Provident Fund Act (1991):

• Private sector employees (including part-time, contract, or probation staff)
• Public sector employees without a pension scheme
• Company directors who receive salaries
• Malaysian citizens and permanent resident

Contributions apply until age 75. From age 60 onwards, only employer contributions apply. Foreign workers who are not permanent residents may choose whether to contribute.

EPF contributions are not required for:

• Non-permanent resident foreign workers who opt out
• Domestic workers not hired by companies
• Self-employed individuals (voluntary contributions available)
• Employees aged 75 and above
• Certain government officials, detainees, and specific indigenous groups

EPF contributions are applicable to an employee’s basic salary, as well as:

• Bonuses and commissions
• Allowances (with limited exceptions)
• Incentives
• Paid leave wages
• Wage arrears and contractual payments

However, the following types of payments are not included in calculations for EPF contributions:

• Overtime pay
• Travel allowances
• Tips and service charges
• Retirement or termination benefits
• Director’s fees
• Gifts and benefits-in-kind
• Non-cash perks