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Securing Your Golden Years: Navigating Malaysia's EPF

The most common source of income to save for retirement in Malaysia, possibly worldwide too, is saving from one’s employment income. However, planning finances that far into the future is quite difficult, hence the introduction of the EPF in Malaysia, which will save a portion of the employee’s employment income into a retirement fund.

What is EPF?

Employee Provident Fund (EPF) or Kumpulan Wang Simpanan Pekerja (KWSP) is a retirement fund that is controlled by the government. Private sector employees are required to contribute some of their employment income every time they receive their wages (usually monthly).

Account Types

Before we talk about the contributions, we should mention how EPF accounts work for the employee. Every employee will have 2 accounts: Akaun 1 & Akaun 2.

70% of statutory contributions (& 100% of voluntary contributions) go into Akaun 1, and money can be withdrawn after the employee reaches the age of 50 or for a multitude of purposes, including:

1. Buying residential

2. Servicing residential loan

3. Pursuing higher education

4. Religious travels

5. Paying for healthcare

30% of statutory contributions go into Akaun 2. Money in this account can only be withdrawn after retiring at the age of 55.

Statutory Contribution

This is the contribution that every employee & their employer must put into the employee's EPF account each time the employee is paid.

The employee’s portion is deducted from the gross salary, while the employer’s portion is paid directly to EPF in addition to the gross salary.

The employee's residency status, nationality & age affects their contribution rate. The exact rate of contribution is based on the schedule provided by EPF. However, we can use the provided rates to estimate the EPF contribution.

Employer’s Responsibilities

Employers are required to register themselves with EPF within 7 days of 1st employing any staff. Employing staff in this case can mean full-time, part-time staff or even recruiting apprentices/interns. Employment also does not strictly require a written employment contract, oral agreement can also be enforced upon by EPF.

As for new employees, employers are required to have them register with EPF before the payment of the next contribution. For example, if a new employee is hired in July, then the employer will have to register the employee within EPF’s system as their own staff before they pay their wages for the month of July.

Both processes above can be completed online using EPF’s online platform I-Akaun if the employer is a registered company with SSM. Any other form of employer (sole traders, partnerships etc) can register themselves & their employees at their nearest EPF branch counter.

Employers are to deduct the employees’ portion of EPF contribution from their salaries & pay it along with the employer’s portion of EPF contribution to EPF before 15 of the following month (For Example, EPF contributions for July wages need to be paid before 15 August), regardless of the actual payment date of salary/wages. Payment can be online through online banking or physically at select bank counters/EPF branch office counters. (Please refer to the link under the references section for the full list of payment methods)


Saving requires discipline & determination. In a perfect world, everyone should have the will & planning to save for their future, however, that is not the case. Mandatory saving has proven itself to be the most effective way of ensuring the financial future of the masses. It acts as a reminder for people to save for their future, and a safety net in case people don’t pick up the lesson.


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