What is EPF?

EPF stands for Employees Provident Fund, or KWSP (Kumpulan Wang Simpanan Pekerja) in Malay, and it is Malaysia’s compulsory savings plan and retirement plan created under Employees Provident Fund Act 1991 (Act 452).

Who Becomes an EPF member?

Any employee working in the private sector, as well as those working in the public sector as a non-pensionable employee, are considered EPF members. KWSP reported that its membership is 530,166 strong as of December 2014. Those who aren’t members can still contribute voluntarily to their EPF accounts.

Why Should I Contribute to EPF?

EPF is a social security institution set up to help fulfill the social and moral obligations of all parties to contribute towards an employee’s retirement funds. However, the money is still yours, and you can withdraw the amount plus dividends when you’re 55, or as required and as permitted by KWSP.

How Much Do I Contribute?

As an employee, you contribute 11% of your monthly salary towards your EPF account every month. That amount is deducted straight from the salary you receive every month, along with your employer’s contributions.

How Much Does My Employer Contribute?

If you earn less than RM5,000 per month, your employer contributes 13% towards your EPF. If you earn more than RM5,000 per month, they contribute 12% instead.

Is It Compulsory?

Yes, it is.

Can I Contribute More Than the Mandatory Contributions Percentage?

Yes, you may. Simply fill up Form KWSP 17A (AHL) to increase your contributions rate. For further reading, refer to our Can You Volunteer to Put More into EPF? article.

Can I Ask My Employer to Contribute More Than the Mandatory Contributions Percentage?

Yes, you may. Simply ask your employer fill up Form KWSP 17 (MAJ) to increase their contributions rate. For further reading, refer to our Can You Volunteer to Put More into EPF? article.

What Happens to My Contributions?

Your contributions are invested by EPF into approved financial investment instruments, such as Malaysian Government Securities (MGS), Money Market Instruments, loans and bonds, equity, and property, to generate income. The investment is paid back in dividends; EPF is required by law to pay at least 2.5% dividends to you every year.

When Can I Withdraw My EPF Savings?

You can withdraw 30% of your EPF savings when you’re 50 years old, and the full amount when you’re 55.

Can I Withdraw My EPF Savings Before I Am 55?

Yes, you may do so for the any of the following reasons:

– You’re 50 years old

– You’re leaving the country

– You’re incapacitated

– To fund your or your children’s education (including step-children and legally adopted children)

– To purchase or build a house

– To reduce or redeem your housing loan

– To pay your monthly instalment for your housing loan

– To fund medical expenses incurred for critical illnesses and/or to purchase medical aid equipment for you or approved family members

– To supplement the cost of performing Hajj (for Muslims)

– Upon your passing (to be withdrawn by your nominee, administrator, or next-of-kin)

However, the amount withdrawn can only come from your Account 2 (your contributions are funnelled into two accounts); in other words, the amount you can withdraw before you’re 55 is no more than 30% of your total savings.

How Do I Withdraw My EPF Savings?

You need to fill up the necessary form, which can be found on the KWSP website, along with other supporting documents, and submit them either at any EPF branch counter or via mail. Remember to bring all original documents for verification for over-the-counter submissions, or to have all documents verified by an authorised officer for mailed submissions. Hassle Free application is applicable to the following withdrawals:

– Age 50/55 years old with savings of more than RM1 million

– Withdrawal to reduce or redeem housing loan

– Housing loan monthly instalment withdrawal

For these withdrawals, you just need to prepare the supporting documents. You don’t need to complete the application form.

For more information, visit the KWSP website at http://www.kwsp.gov.my/.

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