The EPF contributions are made up of the Employee's and Employer's share. The monthly contributions will be credited into the employee's EPF account.
Contribution rate
The contribution rates for employee below age 60, is 11% and for employee above age 60 will be 5.5%. The employer contribution for the employee is at 13% and 12% depending on the salary of the employee. An employee with a salary less than RM5000 will have employer contribution of 13% while more than RM5000 salary, the employer contribution is 12%. However, there are changes on the EPF contribution rates starting January 2021, the full article of its explanation can be found here. You can also check the Jadual Ketiga for the EPF contribution.
If the employee or employer wishes to increase their EPF contribution rate, a respective form will have to be submitted for notice of election.
The new rate will remain until the cancellation form has been submitted. Upon receipt of the notification, the contribution rate will be reverted to the current statutory rate.
Incomes liable for EPF contribution
In general, all payments which are meant to be wages are subjected to your monthly contribution calculation. These include:
- Salary
- Allowance
- Payment for utilized annual leave
- Bonus
- Commission
- Incentive
- Arrears or wages
- Wages for various leaves
- Other payments under services contract or otherwise.
Incomes not liable for EPF contribution
Among the payments that are exempted from EPF contribution:
- Service charge
- Overtime
- Gratuity
- Retirement benefit
- Retrenchment, temporary lay-off or termination benefits
- Any travelling allowance or the value of any travel concession
- Payment in lieu of notice of termination of service
- Director's fee
The EPF contribution must be submitted to EPF before the 15th of the following month. A fine will be incurred upon failure to do so, e.g. the salary deduction for August must be paid as the September contribution before or on 15 September.
Important Note:
1. EPF Contributions should be calculated based on the Monthly Contribution Rate under the Third Schedule of the EPF Act 1991, rather than by the exact percentage; the latter only applies to employees who receive monthly remuneration exceeding RM20,000.
2. You can find the latest Third Schedule on KWSP's website here