The Employer’s Handbook to EPF Contributions in Malaysia

Regardless of which stage you are in your career, saving for retirement should be one of the priorities. Saving early and saving often is the key to a comfortable retirement, which is why Malaysia EPF contribution is crucial.

Both employers and employees are expected to make a Malaysia EPF contribution as a percentage of their salary each month, which is then kept in the fund to be returned to them in retirement (or under certain conditions we’ll get into below). 

But, like lots of bureaucratic necessities, there’s more than a few moving parts and several important legal components you’re going to need to be aware of. Here, we dive into everything you need to know about employer EPF contributions, and how you can advocate for your employees’ future financial security.

Relevant reading: Navigating Malaysia’s Employment Insurance System (EIS)

What is a Malaysia EPF contribution?

In essence, EPF contribution is like a reliable savings plan for Malaysian employees, helping them prepare for their retirement years and other major life events. 

It’s a mandatory program, meaning both your organization and employees need to contribute a portion of their earnings each month. This ensures your employees have a financial safety net in place when they retire, or if something unexpected comes up along the road.

In terms of contribution, you as an employer contribute a larger portion of your employee’s salary to the EPF than they do. This gives a boost to how fast the savings build up, and splits the responsibility between employers and employees. However, KWSP doesn’t just hold onto these contributions—they further invest them and accelerate the savings growth.

When your employees retire (or under certain circumstances like leaving Malaysia permanently, buying a home, or facing medical emergencies), they can access their EPF savings. The EPF contribution is an important part of Malaysia’s economy, allowing for financial stability and growth for all Malaysians.

Read next: Understanding Malaysia’s Employment Act: Updates & FAQs in 2023

Who is responsible for Malaysia EPF contribution?

EPF contribution

As mentioned, EPF contribution is a team effort. Both your organization and its employees have a role to play in Malaysia EPF contribution. 

By law, you as an employer are required to deduct a portion of your employees’ salaries each month and add your own contribution on top. This combined amount is then deposited directly into their individual EPF accounts.

The exact percentage you each contribute is set by the EPF Act 1991 and varies depending on things like your employee’s age and salary. To stay on the right side of the law, make sure to deduct your employees’ contributions from their paychecks and add your portion before sending the total amount to the EPF by the 15th of the following month. It’s important to get this right, as there can be penalties if you don’t.

Omni tip: It’s best practice to encourage your employees to check their EPF statements regularly to ensure timely and accurate contributions.

What payments are liable for KWSP deductions?

In Malaysia, several different types of payment are subject to EPF or KWSP deductions (short for Kumpulan Wang Simpanan Pekerja). Here are the main ones that you should keep in mind:

  • Basic salary: This is the foundation of an employee’s income and is always included in EPF calculations.
  • Wages: This covers all types of pay for work done, whether it’s hourly, daily, weekly, or monthly.
  • Allowances: Most allowances like those for housing, transport, or the cost of living are generally subject to KWSP deductions.
  • Bonuses: Performance bonuses or other extra payments need to be included when calculating KWSP employee contributions.
  • Commissions: If your employees earn commissions, these need to be factored into their EPF contributions.
  • Incentives: Monetary rewards given to employees for good performance are also included.
  • Overtime pay: Payments for working extra hours are part of an employee’s overall earnings and subject to EPF.

It’s important to accurately calculate and perform KWSP deductions from these payments to keep compliant and avoid any legal issues. Stay up-to-date with the regulations and keep your payroll team in the loop to make sure any changes to regulations don’t go unnoticed.

Relevant reading: Your Guide to Malaysia Payroll

How to calculate Malaysia EPF contribution?

Figuring out Malaysia EPF contributions might seem a bit complex, but in this section we break it down into straightforward steps you can follow easily:

1. Know the rates

The percentage you and your employee contribute depends on their age and residency status. Here’s the breakdown for Malaysian citizens and permanent residents as of June 2024:

  • Employees under 60 years old:
    • Employee: 11% of their monthly salary
    • Employer: 13% of their monthly salary (if they earn RM5,000 or less) or 12% (if they earn more than RM5,000)
  • Employees 60 and older:
    • Employee: 5.5% of their monthly salary
    • Employer: 4% of their monthly salary

2. Figure out the total earnings

This includes their basic salary, any additional wages, allowances, bonuses, commissions, incentives, overtime pay, and service charges.

3. Calculate each contribution:

Let’s say your employee is under 60 and earns RM4,000 per month:

  • Employee’s Malaysia EPF Contribution: RM4,000 x 0.11 = RM440
  • Employer’s Malaysia EPF Contribution: RM4,000 x 0.13 = RM520

4. Add them up:

  • Total Malaysia EPF Contribution: RM440 + RM520 = RM960

5. Submit on time

You’ll need to submit these contributions to the EPF by the 15th of the following month. You can do this easily online through the EPF’s i-Akaun (Employer) portal.

Remember, these are just the standard rates. There might be slight variations for non-citizens or under special circumstances. If you’re ever unsure, you can always refer to the official EPF guidelines or reach out to them directly.

How to make Malaysia EPF contributions?

Making Malaysia EPF contributions is a straightforward process that’s made even easier with the online tools available to you. 

Register as an employer: If you haven’t already, you’ll need to register for an account before submitting EPF contributions. You can do this online through the KWSP website or by visiting one of their branches. Once registered, you’ll receive an Employer Reference Number, which you’ll use for all your employer EPF contributions.

Enroll your employees: Make sure all your employees are registered. If they’re not, you can easily register them online or by submitting Form KWSP 3.

Calculate the contributions: You’ll need to calculate the monthly Malaysia EPF contributions for each employee. This depends on their age, salary, and the current contribution rates. We covered how to do this in the previous section, but the KWSP website also has helpful resources and calculators.

Prepare the contribution data: You have two main options for this:

  • Form A: This is the traditional paper form you can fill out with each employee’s details, salary, and the calculated contributions.
  • i-Akaun (Employer): This is the EPF’s online portal where you can easily generate and submit contribution data electronically. It’s a much more convenient option!

Submit the Contributions and Payment: You need to submit the contributions by the 15th of the following month to avoid any late fees. You can do this through:

  • i-Akaun (Employer): Upload your data directly through the portal.
  • Internet banking: Many banks offer EPF payment options through their online platforms.
  • Bank counter: You can submit Form A and pay at designated banks.
  • EPF branch: You can also visit any EPF office to make the payment.

Maintain accurate records: Always keep copies of any forms you submit and receipts for your payments. It’s a good practice to have these records on hand in case you need them later for an audit, or simply to look up data.

Reconcile and report: Double-check your records regularly to make sure everything matches up. The i-Akaun portal is a great tool for tracking your contributions and making sure everything is in order.

What are the Malaysia EPF contribution responsibilities as an employer?

Knowing and performing your employer EPF contribution responsibilities isn’t just a good idea—it’s the law. Here’s what your organization will need to consider as it administers EPF deductions for its employees:


First things first, you’ll need to register yourself as an employer with the EPF. You can do this online through the KWSP website or at any EPF branch. They’ll give you an Employer Reference Number, which is like your ID for all things EPF.

Next, make sure all your eligible employees are registered with the EPF. If they’re new hires who haven’t been registered before, you can do it for them using Form KWSP 3.


Your organization is responsible for figuring out the exact amount to contribute for each employee every month. This includes both your portion as the employer and the portion deducted from your employee’s salary. The exact amount depends on factors like their age and salary, noted in the section above.

Timely payment

It’s important to submit your Malaysia EPF contributions by the 15th of the following month. For instance, January’s contributions should be paid by February 15th. If you miss the deadline, you could face penalties, so set up reminders before the deadline each month.

Record keeping

Keeping track of all your data is key. Make sure you keep copies of all the forms you submit, payment receipts, and any communication you have with the EPF. It’s considered a best practice to keep these records for at least seven years.

Read next: Employee Data Management: How HRIS Can Help Achieve Accuracy and Security


Each month, you’ll need to report the Malaysia EPF contributions you’ve made. You can do this using Form A or, more conveniently, through the i-Akaun (Employer) portal. Make sure your employees track their EPF statements regularly as it shows them how much is being saved for their retirement.

What are the EPF contribution responsibilities for an employee?

KWSP deduction

We’ve stressed about your responsibilities for employer EPF contributions, but your employees play an important role as well. Here’s what will be expected of them:

Understanding your contributions

It’s a good idea for your employees to be familiar with the current contribution rates, both for their share and yours as the employer. This will help them understand how much is going into their EPF account each month.

Encourage them to regularly check their EPF statements through the i-Akaun portal. This way, they can make sure everything is accurate and spot any mistakes early on. These statements show them a breakdown of their contributions, any dividends earned, and their overall balance.

Maintaining accurate records

It’s helpful for employees to keep copies of their payslips, since these show how much is being deducted for EPF. If there are any discrepancies, they’ll have the information they need to discuss it with you.

Remind your employees to let the EPF know if they change their address, contact details, or beneficiaries. This ensures they receive important information and that their account is properly managed.

Voluntary contributions

If they’d like to save even more for their retirement, your employees can make additional voluntary contributions to their EPF. It’s a great way to boost their savings and have more financial security down the road.

Even if an employee becomes self-employed or works in the informal sector, they can still contribute to their EPF. This helps them continue saving for their retirement. The i-Saraan program is specifically designed for self-employed individuals and even offers some incentives from the government.

Can employees pay less than 11% for Malaysia EPF contribution?

The standard employee Malaysia EPF contribution is 11% of their monthly salary. However, there are a few situations where they can contribute less. These include:

Temporary rate reductions: Sometimes, the government lowers the mandatory contribution rate to give employees a bit of financial relief. This usually happens during economic downturns, like the recent pandemic when it was reduced to 7%. Keep an eye out for announcements from the government to see if these reductions are in effect.

Things to keep in mind:

  • Even if employees choose to lower their rate, there’s still a minimum they have to contribute. The exact percentage may vary, so it’s best to check the current EPF guidelines.
  • Lowering contributions means they’ll have less saved up for retirement. It’s a trade-off between having a bit more money now and having a more comfortable retirement later.
  • If your employee reduces their contribution, it doesn’t affect yours as the employer. You’ll still need to contribute the standard 12% or 13%, depending on their salary.

Going back to the standard rate: If an employee decides they want to go back to contributing the full 11%, they can do that at any time. They simply need to let the EPF know.

Learn more: Navigating HR Compliance in Malaysia

Automating Payroll Processes with Omni

It’s clear that the Malaysia EPF contribution process is an ever-evolving yet mandatory process for all businesses. Navigating it can be challenging, and staying up to date with the latest regulations is crucial for HR teams to remain compliant. 
Omni helps HR teams stay up to date with the latest laws and regulations while streamlining the end-to-end employee management lifecycle. Our comprehensive payroll solution is tailored to Malaysia’s specific requirements. With features like support for MYR, automated tax and EPF calculations, and instant payroll reports, Omni can help HR teams simplify their payroll processing while ensuring compliance.

Start your 14 days free trial today and see how Omni can simplify the intricacies and complexities of Malaysia EPF contribution process and minimize the costs associated with common errors.

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