EPF Contribution Rules in Malaysia

The Employees Provident Fund (Malaysia) (EPF) contribution rules play a vital role in Malaysia’s retirement savings and social security framework. Both employers and employees need a clear understanding of current EPF contribution rates, eligibility, compliance obligations and recent regulatory changes — especially with upcoming updates impacting foreign workers. 

What is EPF and why contribution rules matter

The EPF is Malaysia’s statutory retirement savings scheme for employees under contract of service or apprenticeship. Employers and employees must make monthly contributions based on wages and applicable rates, under the Employees Provident Fund Act 1991. Ensuring accurate and timely EPF contributions protects workers’ retirement savings, ensures employer compliance and avoids penalties. 

 

Eligibility: Who must contribute and when

Employees

Any person employed by an employer under a contract of service or apprenticeship falls within the EPF contribution requirement. Employers must deduct the employee share and remit monthly. 

Employers

Employers who engage persons under contract of service are required to register with EPF and make contributions for their employees in accordance with the Third Schedule of the EPF Act. 

Non‑Malaysian/Foreign Employees

Significant change: from October 2025, mandatory EPF contributions will apply to non‑Malaysian citizen employees working in Malaysia (excluding domestic helpers) on valid work passes. Both employer and employee must contribute 2% of monthly wages. 

 

Current Contribution Rates (Malaysia)

For Malaysian citizens & permanent residents

As of the most recent published schedule:

• Employee contribution: 11% of monthly wages for those under age 60. 

• Employer contribution:
  - 13% of monthly wages if employee’s salary is RM 5,000 or below.
  - 12% of monthly wages if employee’s salary exceeds RM 5,000. 

 These rates apply for wages until June/September 2025 as per latest schedule.

For foreign employees (non‑Malaysian)

Effective from October 2025:

• Employer contribution: 2% of the employee’s monthly wages. 

• Employee contribution: 2% of monthly wages. 

How contributions are calculated & remitted

• Contributions must be paid in ringgit with no cents and must be remitted monthly by the employer. 

• Employers must file and pay contributions within the deadlines set by EPF to avoid late payment penalties.

• Employees can make voluntary excess contributions above the statutory minimum if they wish to enhance their savings. 

 

Key Compliance & HR considerations

• HR teams must ensure correct categorisation of employees (citizen vs non‑citizen), salary brackets, and apply the proper rate.

• With the upcoming foreign worker contribution mandate, employers must review their payroll systems and employment contracts to incorporate EPF contributions for non‑Malaysian staff from October 2025. 

• Employers must keep clear records of contributions, ensure timely remittance, and be aware of penalties for non‑compliance.

• Employees should be informed about their contributions, withdrawal eligibility, and voluntary contribution options to optimise their retirement savings.

Why these rules matter to employers & employees

For Employees

• Regular EPF contributions build retirement savings and provide financial security.

• Understanding contribution rates and voluntary options empowers employees to take control of their retirement planning.

For Employers

• Compliance with EPF rules is a legal requirement—non‑compliance can result in fines, reputational risk and employee dissatisfaction.

• Clear EPF contribution practices support good employment relations, transparent payroll practices and aid talent attraction/retention.

• With the foreign employee EPF rule coming into force, preparing in advance reduces compliance risk and financial surprises.

Recent changes & what's ahead

• The EPF Amendment Bill 2025 mandates the 2% for both employer and employee in respect of foreign workers from October 2025. 

• The Third Schedule of the EPF Act has been updated with new contribution rates effective October 2025. Employers must refer to the latest schedule. 

• The EPF continues to promote voluntary excess contributions and encourage members to maximise their savings.

Action Checklist for Employers & HR

• Review your payroll and employment records to identify non‑Malaysian employees and apply the new 2% contribution rule from October 2025.

• Ensure salary brackets are correctly applied (RM 5,000 or below vs above) for Malaysian employee contribution rate calculations.

• Update employment contracts, payroll systems and internal HR policy to reflect changes in EPF contribution rules.

• Communicate clearly to your workforce about EPF contributions, voluntary excess options and how it affects retirement savings.

• Ensure monthly remittances are accurate, timely and recorded; conduct internal audit or compliance review if necessary.

• Offer employees resources or information about EPF benefits and voluntary contributions for better engagement and financial wellbeing.

Conclusion

Understanding and complying with EPF contribution rules in Malaysia is critical for both employers and employees. With statutory rates clearly defined, impending changes for foreign workers and opportunities for voluntary excess contributions, both parties stand to benefit from clarity and proactive action. Employers who get ahead of the compliance curve and communicate openly with their workforce will foster stronger employment relations and better retirement outcomes for employees.

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References:
https://www.kwsp.gov.my/en/employer/introduction
https://mustre.com.my/malaysia-epf-contribution/
https://www.ajobthing.com/resources/blog/epf-contribution-rates-eligibility-calculation
https://www.skrine.com/insights/alerts/march-2025/malaysian-government-fixes-epf-contribution-rate-a
https://www.activpayroll.com/news-articles/changes-to-malaysias-epf-for-foreign-workers
https://quickhr.my/resources/blog/epf-contribution-table-malaysia