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A Complete Guide to EPF Contribution and Benefits in Malaysia (2025)

The Employees Provident Fund (EPF), or Kumpulan Wang Simpanan Pekerja (KWSP), is a cornerstone of Malaysia’s social security system. It is a mandatory savings and retirement fund for all Malaysians employed in the private sector. For 2025, understanding the mechanics of your EPF contribution and benefits is more crucial than ever, especially with the introduction of a new account structure.

This comprehensive guide covers everything you need to know, from the latest contribution rates and the new three-account system to the full spectrum of member benefits and how to proactively maximize your retirement savings.

What Are the EPF Contribution Rates for 2025?

For most employees, EPF contributions are a mandatory part of their monthly salary structure. These contributions are calculated as a percentage of the employee’s wages and are divided between the employee and the employer. Staying updated with the latest EPF contribution rate is a key part of complying with the latest labour laws in Malaysia.

EPF Statutory Contribution Rate Table

Below are the current statutory contribution rates for employees under 60 years of age.

Note: These are the standard rates. Employees can elect to contribute a lower rate by submitting an application to EPF.

Contribution for Employees Aged 60 and Above

For employees who continue to work after age 60, the contribution rates are adjusted. The employee’s share becomes 0%, while the employer is still required to contribute 4% of the employee’s monthly salary. This structure provides continued financial growth for their retirement fund while increasing their take-home pay.

Understanding Your EPF Contributions: Employer vs. Employee

The total amount contributed to your EPF account each month is a combination of two parts. This shared responsibility ensures a steady accumulation of retirement funds throughout your career.

The Employee’s Share

This is the portion deducted directly from your monthly salary. The standard rate is 11%, which is automatically calculated and managed by your employer’s payroll system. This deduction is your direct investment into your future retirement fund.

The Employer’s Share

In addition to your own contribution, your employer is legally obligated to contribute an extra 12% or 13% of your salary to your EPF account. This EPF employer contribution is a critical component of your overall compensation and one of the most significant employee benefits in Malaysia. It effectively means you are saving more than double what you see deducted from your payslip.

How Your EPF Savings are Split: The New 3-Account System

Effective from May 2024, the EPF has restructured member accounts to better balance long-term goals with short-term financial needs, fundamentally changing how EPF builds retirement security. All new contributions are now split into three accounts.

Akaun Persaraan (Retirement Account)

75% of your contributions go into this account, formerly known as Account 1. Its purpose is to accumulate and grow your core retirement savings. Funds in this account are strictly reserved for retirement and can only be accessed when you reach age 55.

Akaun Sejahtera (Wellbeing Account)

15% of your contributions are allocated to this account, formerly Account 2. It is designed to address life-cycle needs that contribute to your wellbeing, such as financing a home, paying for education, and covering medical expenses.

Akaun Fleksibel (Flexible Account)

10% of your contributions go into this new account. It is designed to provide flexibility for short-term financial needs. Members can withdraw funds from this account at any time for any purpose, with a minimum withdrawal of RM50.

Core Benefits of Your EPF Membership

Beyond being a savings fund, EPF membership provides a range of benefits designed to offer financial stability and support throughout your life.

Secure Retirement Savings

The primary benefit is accumulating a substantial fund for your retirement years. Through decades of consistent, compulsory contributions from both you and your employer, your savings grow into a significant nest egg.

Annual Tax-Free Dividends

EPF invests member contributions across a diversified portfolio of assets. Each year, it declares a dividend based on its investment performance. This dividend, which is completely tax-free, is credited to all three of your accounts, compounding your savings over time.

Income Tax Relief on Contributions

To encourage saving, the Malaysian government offers EPF tax relief. You can claim income tax relief on your annual EPF contributions up to a statutory limit of RM4,000. This directly reduces your taxable income, lowering your tax burden.

Financial Support Through Withdrawals

The ability to withdraw from Akaun Sejahtera for major life events and from Akaun Fleksibel for immediate needs provides a crucial financial safety net long before you retire.

Incapacitation and Death Benefits

EPF provides financial aid in unfortunate circumstances. Members who are medically certified as unable to work are eligible for an Incapacitation Benefit, a one-time payment of RM5,000. In the event of a member’s death, a Death Benefit of RM2,500 is paid to their nominated beneficiary or next-of-kin to help with funeral expenses. This support is outlined on the official KWSP benefits page.

How to Boost Your Savings with Voluntary EPF Contributions

Relying solely on mandatory contributions is just the baseline. To truly maximize your retirement fund, you can make voluntary contributions.

i-Saraan for Self-Employed Individuals

This scheme allows self-employed individuals, freelancers, and gig economy workers to save for retirement with EPF. Participants can make a voluntary EPF contribution and receive an additional government incentive of up to 15% (capped at a certain amount annually).

EPF Self-Contribution for All Members

Any EPF member can choose to contribute more than their statutory employee share. These additional payments will also be split according to the 75:15:10 ratio across your three accounts.

How to Automate EPF Compliance for Your Business

For employers, managing EPF contributions involves more than just making payments. It requires precise calculations, timely submissions, and adherence to ever-changing regulations. Manual processes are prone to errors and can lead to significant penalties for non-compliance.

This is where a modern human resource management system comes in. A comprehensive HR platform like Worksy automates the entire payroll process. It ensures accurate calculations for EPF, SOCSO, and Potongan Cukai Bulanan (PCB) based on the latest statutory rates. Such systems generate the necessary bank files for seamless payments and maintain perfect records, guaranteeing your business remains fully compliant with Malaysian labour laws. By leveraging an HRIS, you can eliminate administrative burdens and focus on growing your business.