Are you wondering what could be the biggest reason of fast business growth in Malaysia? The simple answer here would be corporate friendly policies for both investors and employees set by the government of Malaysia. One of such policies that has been introduced with employee’s wellbeing in mind is the Employees Provident Fund.
Here we will explain Employees Provident Fund Malaysia, but first we will learn little bit more about Employee Provident Fund (EPF). The article also includes notes about legal acts that this policy follows, difference between EPF and SOCSO, another corporate benefit scheme and EPF contribution in various business categories.
What is EPF & KWSP?
EPF as mentioned earlier stands for Employee Provident Fund. It is locally known as Kumpulan Wang Simpanan Pekerja (KWSP). This is basically a public pension scheme introduced by the Malaysian ministry of finance for the wellbeing of the employees legally working in this country under various company taglines.
It is a federal statutory body started with an intention to manage and plan savings for the retirement session of an employee. The scheme however has been designed specifically for the benefit of private company employees only. It is made mandatory for all private company workers actively working in Malaysia. In must be noted that, if an employee is a non- Malaysian citizen, this scheme is optional.
Difference between EPF and SOCSO
Both EPF and SOCSO are government approved schemes that are meant to benefit both employee and employer of any private companies operating in Malaysia. However, there are differences between EPF Malaysia and social security organization contribution or SOCSO. Many employers and employee often get confused when both of these are introduced to them.
Private companies in Malaysia tend to choose any one of these, whereas the fact is that, all private companies requires to contribute both EPF and SOCSO. Contributing in these two schemes has been made compulsory by the corporate law of Malaysia. The difference between EPF and SOCSO has been highlighted below:
|EPF (KWSP)||SOCSO (PERKESO)|
|Need to be registered within 7 days of hiring the first employee.||Both employee and employer need to be registered themselves within 30 days of company activity.|
|This is meant for employee retirement plans||This is meant for employees who faced accidents or physical disabilities during company employment sessions|
|This is implemented under the employee provident fund Act 1991||This is implemented under the employees’ social security Act 1969|
|Foreign workers can voluntarily contribute to this scheme||It is mandatory for foreign workers to contribute in SOCSO.|
|The payment for EPS has to be made in either way: Internet bankingE-CarumanRecommended EPF countersSpecifically identified Banks||The payment for SOCSO can be made in either way: iPERKESO portalInternet bankingPERKESO assistant portalSpecifically identified BanksRecognized SOCSO counters|
Needs to mention that, in spite of differences, in both contribution schemes, a required portion from the salary has to be deducted accordingly at a monthly basis. Additionally, both schemes recommend regular distributions of salary statements to the employees.
Steps to register EPF in Malaysia
EPF can be registered wither manually or by online registration process. Here are the requirement steps to register EPF in Malaysia:
- The EPF office situated at regional levels of Malaysia handles and monitors all EPF registration activities.
- Employer of a company has to register EPF form for his/her employees as soon as the employee has been hired
- The Employee has to draft the Form KWSP 1 as part of EPF registration formality
- Additional forms have to be submitted which include Section 14 and Section 15. These forms are issued by the Companies Commission of Malaysia.
- Once registered successfully a company employer will receive several documents of approvals such as: Employer’s Reference Number to facilitate monthly EPF payments, Form KWSP 3, Form KWSP 4, Form KWSP 6, and an Employer’s Registration Certificate as a prove of EPF contributions before company’s employees.
EPF withdrawal process in Malaysia
Once you are under the EPF scheme and contributed as recommended throughout your work timeline in a Malaysian private company, you are eligible to withdraw your EPF in Malaysia the withdrawal, however, demands certain requisitions that need to be checked by an employee.
Another Thing that need to be kept in mind is that, EPF withdrawal process may vary for various regulatory attributes. You have to be up to date with the current local authority related to EPF to be aware about that. These common requirements are:
- you can withdraw your EPF anytime at and after the age of 55.
- In recent days, the most convenient way to withdraw EPF is to use the EPF i-Akaun.
- The fund can also be retrieved via online through e-Pengeluaran.
- The withdrawal request can be sent manually via post to the nearest regional EPF office Malaysia.
- The withdrawal request can be set up by drafting a form that requires personal information and withdrawal confirmations. Once drafted, submit it to the EPF office or online portals.
- An issuer also needs to come up with bank account information
- KWSP 9B (AHL) Application form
- KWSP 3(Pindaan) form
- Once request form has been sent as recommended, EPF body will send your credit to the applicant’s provided address within 2 weeks.
EPF Act Malaysia
EPF in Malaysia follows EPF Act 1991. It is implemented on employers and employees of any private company running in Malaysia. Employees Provident Fund Malaysia follows the same scheme to contribute for their retirement savings. The Act opened up a platform that meets up legal, ethical and moral obligations of Malaysian company employees.
EPF contribution by sole proprietor or partner
The minimum rate of EPF contribution for a sole proprietor can go as low as RM 50. This amount may go up to a maximum of RM 5000 for this type of self-ownership company. It is recommended to pay the amount on time, although, late payment of EPF is not punishable for a sole proprietor in Malaysia.
EPF monthly contributions
Employees Provident Fund or EPF Malaysia has a definite monthly contribution rate. This has to be kept under consideration before intended for the EPF scheme. Following are the contribution rate:
- An employer has to contribute 13% EPF if the revenue of employee is more than RM5000
- An employer has to contribute 12% EPF if the gross salary of an employee is less than RM5000
- An employee will receive 12% EPF from their employer in the company.
- An employee aged older than 60 can contribute EPF at a 5% rate
EPF office addresses in Malaysia
There are many EPF offices well distributed throughout the regions of Malaysia. Here we have provided few regional KWSP/EPF office addresses:
EPF Office in Kuala Lumpur
1. EPF Petaling Jaya Branch Enforcement Office
Level 9 & 10
Blok 1A, Plaza Sentral
Jalan Stesen Sentral 5
Kuala Lumpur Sentral
50470 Kuala Lumpur
2. EPF Seri Petaling
No. 2, Jalan Radin Bagus 6
Bandar Baru Seri Petaling
57000 Kuala Lumpur
3. EPF Wangsa Maju
No. 32A, Dataran Wangsa
53300 Kuala Lumpur
4. EPF Jalan Raja Chulan
Tkt Bawah, Mezzanine & 1, No. 3
Bangunan KWSP Changkat Raja Chulan
Off Jalan Raja Chulan
50200 Kuala Lumpur
EPF Office in Selangor
1. EPF Kuala Selangor
Ground Floor & Level 1
No. 1, Jalan Medan Niaga 6
45000 Kuala Selangor
2. EPF Gombak
Lot 5, Sunway Batu Caves,
68100 Batu Caves
3. EPF Kajang
No. 1, Jalan Hentian 3
Pusat Hentian Kajang, Jalan Reko
4. EPF Klang
Ground Floor & Level 1
Unit B-G-1, North Tower (Tower B)
BBT One the Towers
Lebuh Batu Nilam 1
Bandar Bukit Tinggi
EPF Office in Pahang
1. EPF Jerantut
No. 7, Jalan Inderapura
2. EPF Kuantan
EPF Building Pahang,
Bandar Indera Mahkota
3. EPF Pekan
Ground Floor & Level 1
No. 10, Lorong Peramu Permai 1
Taman Peramu Permai
4. EPF Raub
No. 79, Jalan Tun Razak
EPF Office in Malacca
Jalan MITC, Hang Tuah Jaya
75450 Ayer Keroh
EPF Office in Labuan
Ground Floor, Lot E004,
Financial Park, Jalan Merdeka
87000 Wilayah Persekutuan Labuan
EPF stands for Employees Provident Fund. It is a federal contribution scheme, which has been made compulsory by the Malaysian department of finance for the wellbeing of private company employers and their employees during retirements.
Following are the EPF contribution rate:
**An employer has to contribute 13% EPF if the revenue is more than **RM5000
**An employer has to contribute 12% EPF if the gross salary is less than RM5000
**An employee has to contribute 11% EPF from their salary
**An employee aged older than 60 can contribute EPF at a 5% rate
Once you reach the age 55 years you can withdraw EPF.
An employee can get the EPF statement from the employer under whom he/ she works for at monthly basis.
Any Malaysian employees and employers working in private company are eligible for EPF. Foreign employee can voluntarily contribute to EPF as well. You may want to know about licensing in Malaysia.
It takes 2 weeks to withdraw EPF credits.