If you are a member of the Employees Provident Fund (EPF) earning up to RM5,000 a month, effective January 2012 you will get 1% increase in employer contribution to your EPF account. The current employer contribution in EPF is 12% and this move would benefit 5.3 million working Malaysians, comprising 92 percent of EPF’s active members. However, the employees’ contribution rate remains at 11 percent.
Employees aged 55 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 percent, which is an additional 0.5 percent from the current 6 percent. The employees continue to contribute at 5.5 percent.
For record, the increase is in line with the Prime Minister announcement in his 2012 Budget speech as a move to redress the problem of inadequacy of income during retirement which retirees are now facing. EPF said previous studies had shown that 70 percent of retirees could exhaust their savings within 10 years from the onset of their retirement.
The EPF commends the government for its quick action in putting a damper on the problem as the additional one per cent contribution, coupled with the power of compounding dividend, would add up to a healthier savings for the retirement of working Malaysians.