Malaysia’s Employees Provident Fund (EPF, also known as KWSP – Kumpulan Wang Simpanan Pekerja) has confirmed that the minimum contribution of employees and employers will be aligned with the Minimum Wages Order (Amendment) 2018, effective 1 January 2019.
The minimum wages of RM1,100 are set for both Peninsular Malaysia, and Sabah and Sarawak.
In a statement to Human Resources, the EPF said with the new measure in place, the expected monthly contribution to be received by the EPF for every worker who earns monthly wages will be no less than a minimum of RM264, subject to the worker being employed for the full month. Different minimum contribution may also apply to members who are salaried on a weekly, daily or hourly basis.
The EPF said notices had been sent to all registered employers on this matter and that it would work closely with them to ensure the smooth implementation of the policy.
EPF's chief executive officer, Tunku Alizakri Alias, said: "Low wages, particularly among low-income earners, is one of the primary causes that many Malaysian workers retire with insufficient funds. Alignment of the minimum wage should help EPF members achieve sufficient savings for their retirement and help strengthen their future financial resilience."
Currently, a total of 1.64 million, or 23%, of the 7.11 million active EPF members contributed less than the current minimum wage of RM1,000; this low monthly contribution is likely to result in lower retirement savings for members.
Further, EPF statistics show that a total of 64% of members who have reached age 54 years have savings below RM50,000, which is a meagre sum when taking into account the rising cost of living and household debt.
"With the proven success of EPF’s Retirement Advisory Services for members, the provident fund will be providing free retirement advisory services for employers, including having dedicated officers to manage the employers’ relationship with EPF," he added.
For more information, contact the EPF Contact Management Centre at 03-89226000, visit the EPF website, or visit any of the 67 EPF branches nationwide.