Here’s a basic guide to help you understand the Malaysian Employee Provident Fund (EPF), which is compulsory for citizens and optional for non-citizens. Both employers and employees are required to make monthly contributions.
What is the employee provident fund in Malaysia?
The EPF, or Employees Provident Fund, serves as a retirement planning program for Malaysian employees. It requires both employers and employees to make monthly contributions to the fund.
Employers are required to enroll with the EPF within a week of an employee’s hiring date.
Payments subject to employee provident fund contribution
Besides an employee’s regular salary, there are additional payments that require EPF contributions. These include:
– Allowances
– Bonuses
– Commissions
– Incentives
– Arrear payments
– Compensation for unused annual or sick leave
– Half-day leave wages
– Maternity leave wages
– Study leave wages
Payments exempt from EPF contributions include:
– Service charges
– Overtime pay
– Gratuity
– Retirement benefits
– Termination benefits
– Retrenchment compensation
– Travel allowances
– Any other remuneration or payment exempted by the minister
Employee provident fund contribution rates
How to calculate the employee provident fund contribution?
Employers are required to determine the EPF contribution amount by referring to the contribution rates outlined in the Third Schedule of the EPF Act 1991, rather than using exact percentage rates, except for wages surpassing RM 20,000.
The Third Schedule comprises five segments, each specifying the monthly contribution rate applicable to different categories of employees:
– Part A: Pertains to employees below the age of 60 who are either Malaysian citizens, permanent residents in Malaysia, or non-Malaysian citizens who were EPF members before August 1, 1998.
– Part B: Applies to employees below the age of 60 who are not Malaysian citizens and became EPF members on or after August 1, 1998.
– Part C: Concerns employees aged 60 and above who are either permanent residents in Malaysia or non-Malaysian citizens who were EPF members before August 1, 1998.
– Part D: Relates to employees aged 60 and above who are not Malaysian citizens and became EPF members on or after August 1, 1998.
– Part E: Applicable to Malaysian citizen employees aged 60 and above.
Example of the employee provident fund contribution calculation
As per the Third Schedule’s monthly contribution rate, for a Malaysian citizen employee below the age of 60 with a monthly salary of RM 15,150, the employer is obligated to contribute 12% (equivalent to RM 1,824), while the employee is required to contribute 9% (equivalent to RM 1,368).
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?
Employers have several options for submitting EPF contributions, such as:
– i-Akaun
– e-Caruman platform
– Online banking
– Authorized bank agents of Bank Simpanan Nasional, Maybank, Public Bank, and RHB Bank
– EPF service centers located across the country
How to register for an employee provident fund account?
There are four primary methods available for registering as an EPF member:
1. Automatic Registration: Membership is automatically initiated once the EPF receives the initial contribution from your employer.
2. In-Person Registration at EPF Counter: You can register at an EPF counter using your MyKad. If the registration is unsuccessful or if you’re not a Malaysian citizen, you’ll need to complete Form KWSP 3. Upon successful registration, you’ll receive your EPF member number.
3. Employer Registration via i-Akaun: Your employer can register you as an EPF member through the i-Akaun (Employer) platform. Your EPF member number will be issued upon successful registration.
4. Registration at EPF Smart Kiosk: Use your MyKad and verify with your thumbprint at an EPF Smart Kiosk. Upon successful registration, you’ll be provided with your EPF member number.
How to activate i-Akaun (Member)?
EPF members have the convenience of tracking their EPF balance, obtaining EPF statements, and initiating withdrawal requests seamlessly through the i-Akaun (Member) platform.
Upon registration, members will receive a temporary user ID and password via SMS, which they can use to activate their i-Akaun. Activation must be completed within 30 days through the i-Akaun website.
To activate the i-Akaun (Member), you need to follow these steps:
1. Visit the i-Akaun website.
2. Click on the login option under “I’m a member (i-Akaun).”
Enter the temporary user ID and click next.
Enter the password and click login.
Once you have gone through the terms and conditions, check the tick box and click next.
This will take you to the First Time Login page. Create a new user ID and a new password and click next.
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.
