Overview of Employment Provident Fund (EPF)

Overview of Employment Provident Fund (EPF)

Introduction
  1. The Employment Provident Fund (EPF) or Kumpulan Wang Simpanan Pekerja (KWSP) is a social security scheme established according to the Laws of Malaysia.
  2. The purpose of EPF is to help employees to save and grow part of their income primarily for retirement. 
  3. Every private company is required to contribute EPF for its staff/workers and to remit the contribution sum to KWSP before the 15th day of the following month. For example, the EPF contribution for March 2020 payroll must be paid to KWSP by 15 April 2020. In this case, March 2020 is the payroll month and April 2020 is the contribution month. 
  4. Contributions are a mandatory salary deduction comprising the employee's and employer's share that has to be contributed within a specified period. The minimum rate of contribution by employer and employee is as per the rates specified in the Third Schedule, EPF Act 1991. The latest Third Schedule is effective April 2020 - Dec 2020. 

EPF Contribution Rate (subject to change)

The table below shows the latest EPF contribution rate from April 2020 - December 2020 wages (May 2020 to January 2021 contribution month)

Source: KWSP

Note:
  1. Employers are not allowed to calculate the employer's and employee's share based on the exact percentage except for EPF wages exceeding RM 20,000.00. The total contribution which includes cents shall be rounded to the next ringgit.