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Employees Provident Fund, EPF, in Malaysia

Discussion in 'Teaching abroad' started by xiaorob, Mar 11, 2018.

  1. xiaorob

    xiaorob New commenter

    Dear fellow colleagues,
    I have a quick question about the EPF (Employees Provident Fund) in Malaysia.
    I am a British expat working at an international school in Kuala Lumpur and I'd like to know:
    Is it a legal requirement that your employer contributes to your EPF fund?
    Any help or advice would be welcomed!
    Best wishes,
    victoriaswale likes this.
  2. kemevez

    kemevez Occasional commenter

    Not sure which question you are asking. Could be 1) My employer isn't contributing, should they? or 2) My employer is deducting an EPF contribution from salary but I'd prefer they didn't.

    As an expat you can choose to contribute or not to contribute. You'd be crazy not to. If you don't contribute then your employer won't. If you do contribute the yes it is a legal requirement that your employer does - but it's a laughably small minimum contribution that isn't even worth chasing.

    And the answers are:

    1) its mutually beneficial for tax reasons that your employer contributes a sizeable sum.

    2) you can choose to not have a deduction for EPF (if you have not previously contributed).
    xiaorob likes this.
  3. xiaorob

    xiaorob New commenter

    Thanks for the reply!

    Yes, I would most certainly like to contribute! It is my understanding that if I contribute 12% (the minimum possible contribution) my employer needs to contribute 11%.

    Is this correct?

  4. rosiecg

    rosiecg Occasional commenter

    Hi @xiaorob , I'm also teaching at an international school in KL. I contribute 13% and my school matches that.

    There must be a minimum contribution on the school's part but I've no idea how much that is - sorry that's not much help! If you are contributing they must though.
    xiaorob likes this.
  5. rosiecg

    rosiecg Occasional commenter

    xiaorob likes this.
  6. xiaorob

    xiaorob New commenter

    Great! Thanks for this - much appreciated!
  7. xiaorob

    xiaorob New commenter

    Do you know whether this is a requirement for the school to match that 13%? Or are they just doing it to be nice!?
  8. rosiecg

    rosiecg Occasional commenter

    I'm not sure on the legal requirements - check the KWSP website I guess? Or just ask your HR department, they should be able to answer.

    I'm going to pm you.
    xiaorob likes this.
  9. reg_mcledge

    reg_mcledge New commenter

    This is taken from the EPF website:

    For employees who receive wages/salary of RM5,000 and below, the portion of employee's contribution is 11% of their monthly salary while the employer contributes 13%. For employees who receive wages/salary exceeding RM5,000 the employee's contribution of 11% remains, while the employer's contribution is 12%.

    For comparison, our school contributes 19% to our EPF while most staff contribute 11% although many do increase this percentage.
  10. cellerdore

    cellerdore Occasional commenter

    My understanding is that it is a legal requirement for employers to pay 11% for Malaysian nationals. The minimum payment for non-nationals is 5RM (have friends who work in a school where this is the case). For the school, it makes more sense to pay EPF and then offer a lower comparative salary for tax reasons but if they choose not to contribute a percentage then I do not think there is much you can do about it beyond negotiating for it in your next contract.
  11. kemevez

    kemevez Occasional commenter

    Indeed. One school pays 19% employee contribution. Others vary, but most of the "better" (I.e. higher paying, higher fees) schools at least match the employees minimum (possibly 11% right now). Agree with cellerdore, if they don't pay it then they won't pay it (beyond the RM5). The smart thing to do would be to negotiate in the next contract if you stay on - an effective pay cut that maximises your tax free savings would make sense. The smarter thing, financially would be to seek a job that gives you a better deal.
  12. kemevez

    kemevez Occasional commenter

    That should read 19% employer contribution.
  13. gulfgolf

    gulfgolf Established commenter

    It is not a legal requirement that employers pay into EPF for expat employees. Many do, as stated above, and many do not.
    It’s a gamble anyway. The EPF is rather a mess, claiming massive unrealized profits annually, without justification. And paying out to current retirees as if those unrealized returns were realized. While covering those payments with working people’s contributions. Rather pyramidal.
    Easiest thing in the world to make a new rule that expatriates can no longer cash out when they leave, and can only benefit the same way as citizens, at retirement age and living in Malaysia.
    If you can cash out before the crisis, great. But if you time it wrong, it’ll all be lost money.

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