What is the EPF?

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The Employees’ Provident Fund (EPF), or KWSP in Malay, is a governmental organisation responsible for overseeing a mandatory savings program and retirement planning for private and non-pensionable public sector workers.

This involves monthly contributions from both employees and their employers into savings accounts. These funds can be utilised for diverse investments either managed by the EPF or, in certain instances, by the members themselves.

What are the benefits of EPF contributions?

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Contributing to the EPF has various advantages, including:

The EPF being mandated to provide a minimum dividend rate of 2.5% by law, although historically, it has often exceeded this minimum rate. For instance, in 2014, the dividend rate reached 6.75%.
Employee contributions are tax-deductible up to RM4,000 per year, with an additional tax deduction of up to RM3,000 for voluntary contributions. Employer contributions up to 19% are also tax exempt.

What is the minimum dividend rate guaranteed by law for EPF?

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The EPF, by law, has a minimum dividend rate of 2.5%.

Historically, the EPF has often declared dividend rates higher than the minimum, like in 2014 when the dividend rate was 6.75%.

Are there any tax benefits associated with contributing to EPF?

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Yes, employee contributions are tax-deductible up to RM4,000 per year, with an additional tax deduction of up to RM3,000 for voluntary contributions. Employer contributions up to 19% are also tax exempt.

At what ages are individuals allowed to withdraw from their EPF savings?

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At the age of 50, Malaysians and permanent residents are allowed to withdraw up to 30% of their EPF savings, and at the age of 55, they can withdraw their full savings.

A full withdrawal is also permitted in the event of emigration, disability, or termination of employment for foreigners contributing to the EPF.

Are KWSP and EPF the same?

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Yes, KWSP is the Malay acronym for Kumpulan Wang Simpanan Pekerja, and it is synonymous with EPF which stands for the Employees’ Provident Fund.

It functions as a retirement fund established as a federal statutory body under the management of the Ministry of Finance in Malaysia.

The EPF operates by collecting monthly contributions from both employees and their employers, directing these funds into savings accounts.

Are Socso and EPF the same?

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SOCSO (Social Security Organization), also known as PERKESO (Pertubuhan Keselamatan Sosial), is a Malaysian governmental body established under the Employees’ Social Security Act 1969 to provide comprehensive social security coverage for employees.

The EPF (Employees Provident Fund), also know as KWSP (Kumpulan Wang Simpanan Pekerja) in Malay, is a different statutory body that manages a mandatory savings program and retirement strategy for employees in the private and non-pensionable public sectors.

While EPF’s primary focus is on savings and retirement funding, SOCSO has a more extensive mandate covering various aspects such as accidents, injuries, physical and vocational rehabilitation, loss of employment, job seekers, placements, as well as upskilling and reskilling.

How much does EPF take from salary?

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The EPF contribution deducted from the employee’s salary is around 11% of the wages subject to EPF contribution for employees below the age of 60. Employers should refer to the EPF table for the contribution amounts based on the specific salary range. Employers also contribute at around 13% of the employee’s wages subject to EPF for wages up to RM5,000 and 12% for wages above RM5,000. Employers cannot deduct their part from the employee’s salary. Learn more about EPF contribution rates.