KWSP Contribution
EPF or KWSP is an Employee Provident Fund or also known as the Kumpulan Simpanan Wang Pekerja in Malaysia. Every company is required to contribute EPF for their staff. These contributions are made monthly and must be submitted before the 15th day of the following month. It is also the employer’s responsibility to make sure that they deduct their employee’s salary appropriately and remitted for EPF.
How to opt out from EPF Employee Contribution Rate 11% to 9%?
On November 2020, The Employee Provident Fund (EPF) has announced that as of year 2021, the employee’s statutory contribution rate for EPF will be reduced from 11% to 9%. This in in compliance of the Budget 2021 intentions of decreasing employee contribution rates from 11% to 9%, to increase potential cash flow of up to RM9.3 billion.
This compulsory contribution rate will only affect all employees under the age of 60 years old who are eligible to contribute. The contribution rate remains unchanged for employees above 60 years old.
This changes will take effect on January 2021 (February 2021 contribution) and will remain until December 2021 ( January 2022 contribution).
Employees who wish to maintain their current contribution rate of 11% are required to fill in the Borang KWSP 17A(Khas 2021). This form is available on the EPF official website https://www.kwsp.gov.my/ from December 2020 onwards.
The completed form must be submitted by the employer online via i-Akuan. Submission period starts on the 14th of December 2020. Employers have to keep a copy of the forms received from their employees for their own record.
Who must contribute and how much?
Every Malaysian, Permanent Resident (PR), and registered non-Malaysian member are required to contribute for EPF.
The contribution rate is different for employees based on age, monthly wages, and citizenship.
The table below shows a detailed breakdown on the contribution rate :
| Employee’s Status | Monthly Salary Rate | Stage 1 (Below 60 years old) | Stage 2 (Age 60 and above) |
|---|---|---|---|
|
No limit |
|
|
| RM5,000 and below | Employees share: 7% Employer’s share: 13% (Ref Contribution Rate – Section A) |
|
|
| More than RM5,000 | Employees share: 7% Employer’s share: 12% (Ref Contribution Rate – Section A) |
|
|
| Non-Malaysians (registered as member from 1 August 1998) | No limit | Employees share: 7% Employer’s share: RM5.00 (Ref Contribution Rate – Section B) |
Employees share: 5.5% Employer’s share: RM5.00 (Ref Contribution Rate – Section D) |
- Employers are not allowed to calculate the employer’s and employee’s share based on exact percentage EXCEPT for salaries that exceed RM20,000.00. The total contribution which includes cents shall be rounded to the next riggit.
- Effective from April 2020 salary/wage up to December 2020 (May 2020 contribution month up to January 2021).
Voluntary Contribution
For employee’s that are not required to contribute for EPF, they can opt to make a voluntary contribution. Domestic helpers and foreign citizens can apply to contribute for EPF. They would have to submit the KWSP 16 and KWSP 16B from.
Contribute More than the Statutory Rate (Voluntary Excess)
The employee, employer or both can choose to contribute more than the set rate.
If you want to contribute more for the employee share only, employers are required to submit KWSP 17A (AHL) OR KWSP 17AA (AHL) for employers with more than one employee.
If a voluntary excess is wanted on only the employer’s share, employers are required to submit a KWSP 17(MAJ) form.
If both employee and employer’s share want to contribute more than the statutory rate, employers are required to submit the form KWSP 17A (AHL) and KWSP 17 (MAJ).
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