EPF & SOCSO 4 January 2012

FAQ: 13% employer EPF contribution from 1 Jan 2012

Members of the Employees Provident Fund (EPF) earning a monthly wage of not exceeding RM5,000 will be receiving a boost in their retirement savings when the revised employers’ statutory contribution rate of 13 percent takes effect from January 2012 wages.

The one per cent increase from the current 12 per cent will benefit 5.3 million working Malaysians, comprising 92 per cent of EPF’s active members. Meanwhile, the employees’ contribution rate remains at 11 percent.

Employees who are 55 years and above and earning wages not exceeding RM5,000 will also benefit from the revised rate as their employers are now required to contribute at 6.5 per cent which is an additional 0.5 per cent from the current 6 per cent, while the employees continue to contribute at 5.5 per cent.

Frequent Asked Questions (FAQ) posted by KWSP:

1. Which employees are affected with the increase in employer’s share contribution rate?

The affected employees are employees who receive monthly wage/salary of RM5,000.00 and below as stated in Part A and Part C in the Third Schedule, EPF Act 1991.

2. What is the new employer’s share contribution rate for employees who receive monthly wage/salary of RM5,000.00 and below?

Generally, the new employer’s share contribution rate is divided into two categories:

i) For employees of not more than 55 years old, the new employer’s share contribution rate is 13% (increase of 1%); subject to the total of wage/salary in Part A, Third Schedule.

ii) For employees of 55 years old and above (up to 75 years old), the new employer’s share contribution rate is 6.5%; subject to the total in Part C, Third Schedule.

For future reference, the new employer’s share rates are 13% and 6.5% stated in para (i) and (ii) will be referred as the new rate for employer’s share contribution.
3. What is meant by ‘wage’?

Wage as defined in Section 2, EPF Act 1991 is:
…all remuneration in money, due to an employee under his contract of service or apprenticeship whether agreed to be paid monthly, weekly, daily or otherwise and includes any bonus, commission or allowance payable by the employer to the employee.

4. When is the effective date for the new employer’s share contribution rate?

The new employer’s share contribution rate is effective beginning January 2012, that is for wage/salary received by an employee for January 2012 (EPF contribution for February 2012) and thereafter.

5. How long will the new employer’s share contribution rate take effect?
The duration will be until an official announcement be made should there be changes.

6. Does the new contribution rate affect employee’s share?
No, the employee’s statutory contribution rate remains at 11% (Part A, Third Schedule) and 5.5% (Part C, Third Schedule).

7. What is the rationale of the increase in employer’s share contribution rate for employees who receive monthly wage/salary of RM5,000.00 and below?

This is an initiative by the Government to increase employees’ retirement savings for those who receive monthly wage of RM5,000.00 and below to enable them to have sufficient savings upon retirement. This is due to the longer retirement period as the lifespan increases. Therefore, an employee would need more savings to finance their retirement days.

8. How do I obtain the information related to the new employer’s share contribution rate?

The new employer’s share contribution rate can be referred in Part A and Part C, Third Schedule, EPF Act 1991.

9. Where can the reference for the Third Schedule be made?

Please click here to refer to the Third Schedule.

10. Does the new employer’s share contribution rate also applies to the bonus paid to employees who receive monthly wage/salary of RM5,000.00 and below?

Yes, based on the employee’s category as mentioned in question 2.

11. What is the new employer’s share contribution rate for the bonus of more than RM5,000.00 paid to an employee whereas the monthly wage/salary received is RM5,000.00 and below?

Generally, the new employer’s share contribution rate for bonus of more than RM5,000.00 paid to an employee who receives monthly wage/salary of RM5,000.00 and below is divided into two categories as mentioned in question 2. Examples for the new employer’s share contribution rate with bonus payment for the employees in the two categories are as follows:

Example 1:
An employee of not more than 55 years old who receives monthly wage/salary of RM3,000.00 and bonus payment of RM6,000.00 with a total of RM9,000.00, the employer’s share contribution rate for the employee is 13%.

Example 2:
An employee of 55 years old and above (up to 75 years old) who receives monthly wage/salary of RM4,000.00 and bonus payment of RM8,000.00 with a total of RM12,000.00, the employer’s share contribution rate for the employee is 6.5%.

12. If the employer has made an option to contribute more than the statutory rate for employer’s share contribution prior to this, what is the implication due to the implementation of the new employer’s share contribution rate?

This depends on the terms and conditions of the service or service agreement or collective agreement between the employee and employer.

Scenario 1: If the service terms state specifically that the employer’s share contribution is more than the the contribution rate (example: 17.5%), then the rate shall apply. However, the additional employer’s share contribution can be made to the existing rate.

Scenario 2: In a situation whereby the service terms state that the employer’s share contribution rate is a rate that is more than the statutory rate (example: 5% more than the statutory rate), then the new employer’s share contribution rate must be taken into consideration and takes effect (example: 13% + 5% = 18%).

13. Can the employer contribute more than the new statutory rate?
Yes

14. Is the new rate imposed on employers who are making payments for outstanding contributions for employee’s wage/salary before January 2012?

No, the new employer’s share contribution rate does not affect earier months contribution and outstanding (before January 2012).

15. If an employee does not work in full for a certain month and receives monthly wage of less than RM5,000.00, what is the new employer’s share contribution rate imposed?

The employer’s share contribution rate imposed is based on the new rate as mentioned in question 2 (i.e. 13% or 6.5% subject to the Third Schedule).

15,683 total views, 27 views today

Share Button
nbc.geoffreyAuthor:
Mr. Geoffrey is the Pro Editor and Founder of NBC Blog.
Geoffrey has written 136 articles for NBC Blog.

23 Comments

  • Hi, where can I get the new 2012 EPF deduction timetable for employees & employers? And also the latest SOCSO timetable?

    Thanks..

  • chandra dewi

    Dear sir/madam, i would like to know the contribution for employee and employer.thank you

  • chandra dewi

    And also EPF contributions timetable for employee and employers. and also sosco time table. thank you.

  • our company does give us the petrol allowance (paid every month) as well as sometimes the hardship allowance. Are those two allowances subject to be contributed in EPF?

  • Hi, Angelina,

    With reference to the EPF table, it comes to know that the employers have to make contribution to EPF with the following conditions:

    a) Malaysian citizens
    b) Not Malaysian citizens but permanent residents of Malaysia
    c) Not Malaysian citizens but who have elected to contribute before 1 August 1998

    If there is a case, do we need to contribute EPF to foreign workers ( i.e. in the case of he/she is not Malaysian citizens but become permanent residents of Malaysia –condition 2), or the employment terms and conditions for foreign workers are subject to change based on the countries agreements from time to time?

    I do not really understand the real meaning of condition (3).

    Very much appreciate if you can further elaborate these conditions. Thank you.

    • Hi Lim, let’s take an example here.

      Mr Steven (Australian) is professional contract worker employed by a Malaysian company. The contract is to engage his service for 2 years.

      Since he is not Malaysian Citizens nor permanent residents and the contract has not mentioned about EPF contribution, then his payment of contract service is not subject to EPF. It’s up to the terms & conditions of the Contract.

      However, he is given an option to voluntarily participate the EPF contribution.

      If he has become PR during the contract period, the company is advised to clarify with the EPF officer of any KWSP branches.

  • Yong Seng

    I had withdrawn my EPF money after 55 years of age (closed account). If I am re-employed, is it compulsory or optional for me to contribute to EPF?

  • Lim Tek Leong

    Hi, Angelina,

    Employment act 1955 protects all manual employees and those who earn up to RM1500. Anyway, effective from April 2012, the minimum wages increase to RM2000, is the new employment act implemented? Any ideas about which good website I can refer to?

    Very much appreciate for your response and reply.

    Thank you.

  • May i know when shall we contribute to epf&sosco to our employee ?

    (1) It is the first date he/she start working with us although she/he is still under probation period for one months ?

    OR

    (2) After company confirm he/her position , only we start register his/her epf & socso ?

    • Hi Nick, legally it should be started from the first day of the employment even though it is under probation period.

      Most workers are agreeable to the company’s policy to contribute EPF & SOCSO right after he/she has been confirmed.

      But, if he/she is not confirmed & is asked to leave the company, he/she can complain to KWSP & PERKESO for the company’s failure to contribute EPF & SOCSO.

      KWSP & PERKESO will then take action to instruct the company to contribute all portions (include company’s & staff’s portions) to respective departments, making more payment out from the company. (You can’t deduct the pay of the staff since he/she is no longer with the company)

  • i have a doubt on such case, please advice:
    an example employee with:
    Basic pay = RM 2900
    Unfixed allowance = RM3000
    All together > RM5000,
    May I know the EMPLOYER EPF contribution is 12% or 13%?

    • Hi Moon_sw, all allowances are subject to EPF contribution except for travelling allowances.

      Since your total pay is more than RM5,000, then the EPF deduction should be 13%.

  • jassin sulaiman

    I would like to inquire whether it is compulsory to contribute to EPF after reaching 55yrs. Is it optional or a requirement? I am earning a total salary of RM4500 but contributing based on RM2500 as the balance are considered allowances. Is this correct or should the management and myself contribute based on my total salary.

    Tq.

    • Hi Jassin, you have 2 questions over here.

      First, the EPF contribution will be half of the standard rates for those workers aged more than 55 years.

      Second, all allowances except for travelling allowance are subject to EPF, so it is not correct if only contribute EPF based on your basic.

  • Loh Lay Wah

    An employee (still under probation) with basic RM2,000, but after deduction of no pay leave the net pay is RM1,500. EPF contribution is based on RM2,000 or RM1,500? Please advice.

  • i want to aks how can i register the new account at EPF & SOCSO for my new company? any form should i submit? and how to get the form? tq!

  • Hi, i know that travelling allowance should be excluded from EPF. is it no matter in terms of monthly fix travelling allowance or claim basis travelling allowance? Do there have any difference on salary pay and submit tax?
    Thanks.

  • A pensioner joins our company as a full time employee earning rm 2000.00.
    He has opted not to contribute epf. Is that allowed?

Leave a reply

required

required

optional


Daftar Syarikat Sdn Bhd Baru dengan hanya RM1,460 sahaja!
Register Your New Company (Sdn Bhd) for just RM1,460 only!Call Us Today!
Daftar Syarikat Sdn Bhd dengan hanya RM1,460!